EU APT prices steady despite concerns over China demand

Covid-19-related lockdowns in east China are increasingly raising concerns about global tungsten demand, but prices are still holding firm in Rotterdam due to low stocks and shipping delays, creating a large differential between the two regions.

"It is a massively split market," a tungsten producer said this week. "Chinese prices are diving but consumers in the rest of the world are not buying them."

Prices for ammonium paratungstate (APT) in Europe remained firm at $350-352/mtu duty unpaid in warehouse Rotterdam on 19 May despite a gradual decrease in fob China export prices in China since mid-April. Fob China APT prices were assessed at $327-333/mtu on 19 May, down from $337-342/mtu from 7-20 April.

After rising steadily since mid-December last year, the Chinese market began to lose ground at the end of April, entering a rapid downwards trajectory as automotive and manufacturing producers in Shanghai were forced to suspend production because of Covid-19 lockdowns, severely reducing demand for cemented carbide products, the major downstream consumption sector for tungsten.

Against this uncertain background, market participants in Europe and the US remain cautious, waiting to see the next step in China's zero-Covid-19 policy.

"We are looking at what is happening in China over the next weeks — whether lockdowns will continue, or it will open up," a European tungsten seller told Argus. "We see mixed signals — negative signals from China, where the market is depressed, but it is not the same [in terms of demand] in the rest of the world. At the end of the day, it is a question of availability and if there are also production cuts in China, the trend could reverse. The market could go in both directions".

Tungsten intermediate prices are also maintaining a premium in Europe because shipping delays have worsened, mainly because of lockdown disruptions at Shanghai port, the world's busiest container port. A sharp increase in transit times globally amid congested ports continues to disrupt trading. It is estimated that a fifth of vessels globally are waiting outside a congested port, according to a recent report by maritime intelligence company Windward.

"New shipments from China will arrive in August or September," a trading firm said. "Buyers cannot wait that long, and they pay a premium for prompt material."

Tungsten scrap, an important source of raw material for the tungsten industry globally, continued to remain high, market sources said, as outbreaks of Covid-19 in China disrupted scrap production and tightened supply.

Meanwhile, tungsten concentrate prices lately have lost their upwards momentum amid thin spot trade. European prices for tungsten concentrate min 65pc were last assessed at $280-290/mtu in-warehouse Rotterdam on 17 May, unchanged since the end of March, although still up sharply from a low of $162/mtu in mid-November.

"China is not buying and there is general caution in the market because of Covid-19 restrictions in China, [while] prices in the African market have also eased lower," a seller said.

Mining of tungsten concentrate has momentarily paused partially in central Africa, since mining firms in the region are focusing on other commodities such as tin and tantalum, because these markets remain more profitable, market sources said.

"No one is mining tungsten concentrate because tantalite and tin prices are so much higher right now," a second tungsten concentrate seller told Argus.

By Cristina Belda