Why Ferro-Tungsten Is an Indicator of Industrial Metal Health

Copper is often used as the bellwether of the global economy (when copper prices are high, global growth is strong, goes the theory) and although it is a simplistic argument, it has a certain underlying logic.

So too does the price of minor metals consumed by the stainless and alloy steels industry as a bellwether of the health of industrial activity regionally – if not globally.

Take ferro-tungsten, for example.

Ferro-tungsten is used as a steel alloying element for use in industrial tools and heavy machinery used for working other metals, such as molds and cutting tools. Ferro-tungtsen also has uses in filaments, electrode wires and electrical components.

In totality, therefore, demand for this crucial alloying additive could be said to be a fair bellwether for the state of the industrial metalworking market.

So when a recent Reuters article mentions that prices for ferro-tungtsen have fallen to a more than two-year low in Europe, it should come as no surprise seeing how the European industry is suffering.

With the exception of a few high-end brands, most European automotive companies for example have been facing falling sales, part-time working and chronic overcapacity for the last two to three years. This year, the situation has gotten even worse as prices for ferro-tungsten are down nearly 10 percent since the beginning of the year and at their lowest since November 2010 – currently trading at around $39-$40 per kilogram, according to the article.

What About the Other “Ferro”s?

Apparently, prices are also weakening for other ferro alloys such as ferro-molybdenum and ferro-vanadium.

Anthony Lipmann of Lipmann Walton & Co., a British minor metals trader, is quoted in the article as saying that in the absence of a futures exchange like the LME distorting the market for ferro alloys, low prices represent a genuine slump in demand.

This is a condition that is unlikely to change anytime soon, as European manufacturing struggles to post any growth in spite of optimistic comments made by European politicians.

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