Tungsten Market Set to Undergo Further Changes to 2018

June 9, 2014

LONDON, June 9, 2014 /PRNewswire/ –

Demand for tungsten filaments continues to fade. Global tungsten demand has increased
on average by 2.7%py since 2008, although Roskill estimates this will slow to 2.6%py in
the years to 2018 as its direct use in lighting applications diminishes.

Representing 12% of total demand in 2013, tungsten used in lighting applications is
forecast to decline by around 5%py in the years to 2018. The drop-off in demand is caused
by the replacement of incandescent bulbs by fluorescent and LED bulbs in both industrial
and domestic applications. On a positive note, however, these new lighting products
require greater volumes of refractory tungsten alloys indirectly in their manufacture,
boosting demand in the alloy sector.

Tungsten consumption from other electronic and electrical applications, including
electrical contacts, electron emitters and lead-in wires, is forecast to grow at 5.4%py
through to 2018, more than double the overall trend. The resistance of tungsten to wear
and corrosion and its ability to withstand arcing make it a suitable metal for use in
contacts and voltage regulators. Demand from these applications however is minor in terms
of volume, meaning by 2018 their share of demand would only be 2%.

Hard metal production in China will continue to drive demand growth

Greater automotive production, particularly in North America, China and Europe, in
addition to increasing demand in mining and wear resistant applications is forecast to
increase demand for cemented carbide products by 3.6%py to 2018 and increase its share of
overall tungsten demand to around 63%.

Growth in tungsten demand will be led by the Asian market, particularly China which
accounted for 48% of consumption in 2013. China is forecast to further increase its share
of global tungsten demand to 52% by 2018, outpacing both European and North American
demand growth.

Recycling has reduced China’s influence in the export market

Chinese production accounted for 80% of global mine production in 2013, falling from a
peak of 84% in 2010. The main production centres in China are in Jiangxi and Hunan
provinces, extracting both wolframite and scheelite bearing ores. China’s share of global
production is expected to reduce going forward, although it is forecast to remain the
dominant producer at 78% of global mine supply in 2018.

Secondary production of tungsten has become an increasingly important source of
tungsten for processors such as Plansee Group, H.C. Starck and the newly expanded
Kennametal, as the technology and the capacity to recycle tungsten containing products
have become more widespread. Europe and the USA are the main centres for tungsten
recycling with approximately 45% of tungsten demand met by recycled materials in 2013. In
Asia, Japan sourced around 20-30% of domestic tungsten demand from recycled material in
2013, compared to approximately 15% in China. The rise in recycling outside China has
significantly reduced China’s influence on the global market and diminished the effects of
its export restrictions. Secondary tungsten formed 22% of global supply in 2014, and it is
forecast to increase to 26% by 2018, driven predominantly by more widespread recycling of
cemented carbide scrap in China.

New mine supply will diversify raw material sourcing and support market growth

Non-Chinese tungsten mine producers are forecast to become more significant suppliers
with a number of large-scale tungsten projects scheduled to begin production by 2018. Wolf
Minerals’ Hemerdon project in the UK is under construction, while Ormonde’s Barruecopardo
project in Spain and Thor Mining’s Molyhil project in Australia could also enter
production over the forecast period, with a combined capacity of 5,500tpy W. New producers
would increase supply diversity and volume, further reducing China’s dominance of mine
output. Roskill forecasts additional production from mines entering production post-2012,
including recently opened operations in Australia and Vietnam, could represent 9% of total
tungsten supply by 2018. Mines currently on care and maintanence in Brazil and Peru may
also re-enter the supply chain.

Conflict-free legislation has disrupted African tungsten production and trade

The introduction of the Dodd-Frank act in the USA during 2010, along with EU Conflict
Minerals Regulation in 2014, has seen a shift in the flow of tungsten materials from
central Africa. Historically, the EU and USA had been significant markets for central
African sourced tungsten, with it forming around a quarter of exports in 2009. Exports to
the USA and EU in 2013, however, had fallen to around 1%, with Russia and China becoming
the largest markets.

Tungsten prices continue to face oversupply pressure

After peaking in 2011 and spiking again in 2013, tungsten prices are forecast to fall
throughout 2014 and early 2015. Improving availability of raw materials from new mine
projects is increasing oversupply pressure in the market. As tungsten demand increases in
subsequent years, and with little new additional production expected to come online, the
market balance will be pushed closer to equilibrium towards 2018, potentially catalysing
an increase tungsten prices. In the meantime, focus may shift to the cost position and
viability of specific mining operations, including in China where lower costs have
previously insulated suppliers from lower prices.

Roskill’s new Tungsten: Market Outlook to 2018 report contains full estimates for
2013, profiles on major producers and projects, an assessment of key market trends and an
outlook for supply, demand and prices to 2018.

This latest edition is available at a price of GBP5200 / US$8300 / EUR6200 from
Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL ENGLAND. Tel:
+44-20-8417-0087, Email:info@roskill.co.uk Web:http://www.roskill.co.uk/tungsten.

Note to editors

Roskill Information Services Ltd. of London, UK is a leading provider of multi-client
and bespoke market research services to the minerals and metals industry.

The new tungsten report contains 295 pages, 151 tables and 91 figures plus an appendix
of international trade statistics. It provides a detailed review of the industry, with
subsections on the activities of the leading producing companies. It also analyses
consumption, trade and prices.

For further information on this report, please contact Robert Baylis,
rbaylis@roskill.co.uk or +44-20-8417-0087.

SOURCE Roskill Information Services

Source: PR Newswire

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