Tungsten Shortage

Perhaps you are having trouble getting some colors and sizes of your favorite tungsten beads.

These articles may help explain the situation.

Monday April 22, 2013, 3:23pm PDT

The Chinese State Reserve Bureau plans to start stockpiling tungsten concentrate with an initial purchase of 10,000 tonnes, a major tungsten producer told Metal-Pages today.

China’s tungsten ore reserves have declined from 4.2 million tons to 1.9 million tons, a decline of over half, according to statistics from 2003 to 2011. The purchase, which will be undertaken by China Minmetals, the Asian country’s biggest producer of tungsten, will be equivalent to one month of national output of tungsten concentrate from China.

As a result of the purchase, the coming months will be marked by a shortage of tungsten concentrate, causing higher prices.

Currently, prices for 65-percent grade wolframite have climbed to RMB 127,000 to 129,000 (US$20,542 to $20,865) per tonne from last week. Tungsten APT min 88.5 percent is also up 2.18 percent, at RMB 185,000 to 190,000 ($29,923 to $30,731) per tonne.

Earlier this month, Metal-Pages reported that China’s tungsten market concentrates had seen significantly higher offers, but were lacking support.

“Most tungsten smelters have ceased purchasing tungsten concentrates and are watching the market. I do not think prices will go up further,” a Hunan-based smelter source told Metal-Pages.

 

From Forbes Magazine:

The following is a guest post by Malcolm Gissen, co-manager of The Encompass Fund.

April 2012

Few investors know that tungsten was the number one metals performer in the world last year, gaining 35% while most other metals declined in price.

Tungsten has retreated a bit so far in 2012 but the current price of about $425 per metric ton is still historically high. With demand increasing at a rate of about 8% a year and production declining,it’s likely that the price of tungsten is will rise over the next few years.

Tungsten is classified as a rare metal though it’s found in many countries. It is indispensable because of its many applications. It’s the second hardest material with the second highest melting point (diamonds ranks as first in both categories), and thus there are few materials that can be substituted for it. In the U.S. tungsten’s uses include tools and machinery primarily in the metal-working, construction, mining, and oil and gas drilling industries.  It is estimated that 25% of the use is in light filaments and 10% for artillery and weapons.

Why is tungsten rising in price? Like several other metals, the tungsten market has been controlled by China. Tungsten prices jumped 35% in 2011 and remain historically high. That is because of concerns that China, the leading producer and consumer, has been reducing exports. This concern is so great that in 2011, the UK Geological Survey put tungsten at the top of its list of economic metals whose supply is at risk. China has taken several steps to reduce production and exports of tungsten:  they have shut down small mines as unsafe, implemented export quotas, and added export duties.

It is not that easy to invest in tungsten.  There are two Canadian companies currently focused primarily on tungsten production.  Malaga, Inc. (MLG.TO; MLGAF.PK) produces tungsten in Peru, and is increasing production.  The stock  trades at about 15 cents.  North American Tungsten (NTC.V; NATUF.PK) is in production in the Northwest Territories, Canada.  It began production in 1962, and has shut down the mines several times when the tungsten price got too low.  It’s stock trades at about 43 cents. Geodex Minerals (GXM.V; GXMLF.PK) is an exploration company with properties in New Brunswick, Canada.  It is exploring for tungsten, molybdenum, rare earth elements, and other metals and minerals.

These are micro-cap companies, in other words, be prepared for volatility and risk, while hoping for gains. Further, with tungsten prices at highs, and the supply-demand characteristics, one can anticipate other companies making efforts to discover and produce tungsten.

 

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