For years tungsten supply and demand used to hang in a balance if you will. This widely used but often overlooked metal featured as a significant cost inflator. Tungsten has been considered a strategic metal due to its use in cemented carbide parts for wear resistant applications such as drilling, mining and metalworking. In addition, it is an important constituent in heating and lighting elements, welding, the production of super-alloys and armor piercing ammunition. Consequently tungsten has been considered a metal of strategic importance for many western economies but now other countries are waking up to the rising demand and limited supply situation. Notably China – both the world’s largest producer and consumer – has imposed export taxes on tungsten concentrates and refined metal, reducing exports and increasing imports. Smaller Chinese mines have become depleted and the authorities are seeking to secure resources to meet growing domestic demand. (more…)

In what news commentators said was the biggest one day drop in commodity trading history, the LME plunged during its opening Tuesday morning. Copper and aluminum took the biggest dives.   The spot aluminum price was off $500/ton  at $2434 cash. The spot copper price plunged 25% to $6389. The markets remain volatile throughout morning trading.

According to several analysts, base metals have attained “bubble-like properties” and many believe that industrial metals were set for a sharp correction. This may be just the beginning of the sell-off. The drop comes as no surprise as just last week RBC Capital Markets called for a decline in prices for a number of base metals. We have been saying for quite some time that many of the metals were becoming more than frothy. Clearly supply and demand were not creating any kind of market equilibrium. We will be updating this story throughout the day. Oddly enough, this unprecedented drop came on the first of the month.

–Lisa Reisman

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