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.