Carbide Costs Continue to Rise
What is the cause of this and when will it stop?
Mike Morette, Sharp Tool
Company
Tungsten
carbide is an extremely unique and invaluable metal to many industries.
Its chemical properties are like no other, giving it one of the highest melting
points of all elements. With the combination of cobalt, cemented carbide is
powerful enough to withstand the most punishing applications. Simply put, it is
irreplaceable in our industry.
Over the past six months, APT (Tungsten Carbide) has increased an astonishing
45%. As many of you are aware, nearly 90% of all carbide comes from China in one
form or another. Over the years, the Chinese have sold APT at a particularly
low price. In doing so, they have eliminated foreign competition thus dominating
the APT market. With a near monopoly on available tungsten deposits, the Chinese
government decides how much tungsten is released and at what price it goes for.
Since 2008, the Chinese government has been strategically
controlling how much carbide is being mined and exported. This, along with an
increased demand for APT has caused prices to increase dramatically.
In the past month, tungsten powder has jumped another 10% due
to speculated stimulation on behalf of the Chinese government. As a result of
economic instability in China, owners of tungsten mines are now reluctant to
sell carbide. They are keenly aware of the potential profits that can be
obtained in the near future if they continue to be frugal with their reserves.
Over the past several years, the value of carbide has been increasingly
recognized in other fields. To name a few, the medical, automotive, jewelry and
electronic industries are expanding their demands for various carbide products.
Carbide is quickly replacing lead in various applications due to an increasing
concern of lead’s toxicity.
So what does the future hold? Countries such as America, Spain, Canada, Russia
and many others have vast tungsten reserves but up until now, were unable to
compete with the Chinese. Ormonde Mining Plc (LON:ORM) announced it has filed
applications with Spanish authorities for tungsten production at their
Barruecopardo Tungsten Mine by late 2012. According to Ormonde Mining, the mine
is capable of producing 8% of non-Chinese tungsten. Malaga Inc (TSE:MLG), has
announced their Pasto Bueno mine in Peru has produced a 13.6% increase in
tungsten from 2009 - 2010.
All reports are showing that tungsten is expected to be on
short supply though 2011. It will be interesting to see how the world reacts to
the Chinese stronghold on APT. As the largest consumer of carbide products in
the world, this drastic increase in the price of APT has had the most profound
effect on China themselves.
Mike Morette,
You can contact mike at (800) 221-5452 / mike@sharptool.com
