Tungsten demand is still soaring..

Tungsten market starting to reduce reliance on supply from China

A rise in global tungsten consumption of 25% in the period between 2002 and 2005, compared to a 20% growth in primary production led to a sharp increase in prices during 2005 and 2006. Chinese production accounted for over 80% of global primary production in 2005, but the tungsten market is showing signs of reducing its reliance on supply from China. Mines exploiting rich deposits are approaching exhaustion in many areas of the country and may not be replaced, or those that do open may be extracting lower grade ores. The balance between supply and demand in the tungsten market depends to a great degree on the continuing efforts by the Chinese government to exert control over its domestic tungsten industry. An increase in tungsten prices has historically led to additional production in China in contravention of official production quotas. If this were to occur again then prices could return to low levels seen in the recent past. There have been very few new applications for tungsten in recent years and most end use markets are relatively mature. This means that average growth rates tend to be generally in line with cyclical economic activity. However, global demand rose from 45,100tW in 2002 to 60,500tW in 2005, an average of 10%py. Demand for tungsten is forecast to grow by an average 3%py to 2010, when it will reach 68,250t.