Strong demand from the oil and gas industry as well as the recovery of the aerospace industry will be key in driving US tungsten carbide consumption in the coming months, as demand for residential construction projects remains under pressure, delegates at the International Tungsten Industry Association (ITIA) in Brussels heard today.
"In terms of demand, the tungsten market in the US in 2022 will be significantly above the 2021 level but will not reach the 2017-18 level," US-based supplier Global Tungsten and Powders director of sales and marketing Teemu Liukkonen said. "We should see demand at similar levels for the next months… It will be supported by strong employment figures, infrastructure bill effects, and defence spending," he added, even though "there is also a lot of uncertainty over geopolitical factors and supply chain risks".
One of the main demand drivers for cemented tungsten carbide — alloys made of tungsten and cobalt or nickel — will remain the oil and gas sector. Currently, oil and gas accounts for 20pc of US demand for cemented carbide, and it is expected to take up a larger market share going forward, Liukkonen said.
"US crude production is forecast at an average of 11.8mn b/d in 2022 and 12.6mn b/d in 2023, which could set a record high for US crude production," he added.
"Natural gas rig counts are up by 3.7pc year on year," Liukkonen said. "At the same time, natural gas and natural gas liquid prices are increasing in an already elevated market."
In addition, applications for tungsten alloys in the aerospace industry are being supported by a strong comeback after Covid-19 lockdowns, and the long-term outlook indicates further growth. "The airlines will be doing very well — airlines will need 41,000 new airplanes over 20 years," Liukkonen estimated.
Meanwhile, automotive demand accounts for around 17pc of total market share, he added, noting a severe decline over the past two years owing to the ongoing chip shortage.
The construction sector is also lagging behind 2022, delegates heard, currently accounting for just 7pc of cemented carbide demand. Higher interest rates and inflation are hampering growth, although increased infrastructure spending could partially make up for the decline in residential building, Liukkonen said.
Meanwhile, mining takes up 15pc of the total demand. "Year-to-date coal production is 4.5pc higher than last year for the same period," he noted.
