Raw material shortages and consequent price increases are putting precision tool manufacturers under strong pressure. After the worst-ever drop of machinery and tools demand in 2008-2009, the market is back to growth. However, recovery has also brought a price increase in raw materials required to produce cutting edges, whereby such costs had not decreased proportionally during the crisis. So, toolmakers are now facing increases by up to 100 percent in one year. The most affected item is tungsten carbide, a key ingredient for hard metals. According to mid-2009 Metal Bulletin, the price of the most popular tungsten-based commercial product (ammonium paratungstate, Apt) at the peak of the crisis was around 200 dollars per metric ton, while in May 2011 it reached 480 dollars. At present, month-on-month price increases by more than 15 percent are not unusual. Slight price decreases for cobalt, used as binder for hard metal (Hw) cutting edges, cannot compensate for the overall price increase.
Tools: raw material increasing. Hard metal prices doubled
There are multiple reasons for this price rally, especially for tungsten. Approximately 80 percent of global tungsten ore production comes from China. Only 60 percent of tungsten mines are located in China, but in recent years, mining activities in other countries have been discontinued due to low prices. Despite massive tungsten ore resources available in North America and Bolivia, for instance, it is virtually impossible to turn to other suppliers. It seems that some Western mining companies are considering to re-open a few mining sites outside China. However, it is taking a few years before significant volumes are available on the market.
Just like rare earth elements, the Chinese government has started to regulate export flows. Adding up to growing demand triggered by economic recovery, these measures have further decreased availability. The Chinese government has also reduced electricity supplies to mining sites, in order to achieve voluntary environmental and climate protection targets. Some mines have closed down and quite a few companies have discontinued extraction last autumn, as they had already achieved planned volumes. This has brought a sheer price rally in the past twelve month, without forgetting the Chinese currency revaluation against the US dollar, which has further boosted Chinese export prices.
Price variations are less significant for polycrystalline diamond (Pcd), despite isolated shortages due to increased demand. As a result of endless carbon availability (the original element for diamonds), Pcd is a true alternative, especially for wood-based material machining.
Hard metal cost share depends on tool type
The cost shares of cutting edges and tool bodies vary according to tool type. Similarly, the cost share of cutting edge materials on total chipforming tool costs also varies. Cutting edge costs in a HW tool may range from 20 to 60 percent. In HS tools, this share is slightly lower. This clearly shows the importance of raw material availability and guaranteed supplies, not only for toolmakers, but also for end users.
Getting out of the price trap
Currently, it is impossible to replace hard metal in woodworking without affecting quality and productivity. In terms of hardness, tungsten carbide has no equals. Together with cobalt, which delivers the necessary toughness, hard metal meets all the requirements of modern solid wood machining. Therefore, it is essential to increase the recycling share substantially from current 35 percent. Recent developments in cutting edge coating promise longer life and, consequently, lower hard metal consumption. A greater use of diamond-tipped tools is another alternative. However, diamond has clear limits in solid wood machining, due to different cutting geometries required, high hardness and low toughness. But all in all, these are just drops on a hot stone.
As long as the favorable economic trend keeps demand high and offer low, we will have to deal with constantly increasing prices. In the medium term, new cutting edge materials and different tool geometries will be introduced, with a lower percentage of Hw. German tool manufacturers are collaborating with raw material suppliers to find viable alternatives, but it will take some time before these solutions reach the market.
Journalists needing more technical information about the arguments of this press release can get directly in touch with Dominik Wolfschütz, Eumabois Toolgroup Secretary Office, phone +49 69 6603-1819, dominik.wolfschuetz@vdma.org.
Tools: raw material increasing.
Hard metal prices doubled
ultima modifica: 2011-08-02T00:00:00+00:00
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