China, the world's top producer and exporter of tungsten, is cutting shipments this month as several large mines grind to a halt and suppliers await the issue of new export licences, traders and producers said on Monday. They said some exporters had used up their 2004 quota while others, faced with rising raw material costs, were unwilling to lower their price for the hard metal used in cemented carbides for cutting and machining tools such as saws and drills.
Spot prices for APT, a heavily traded intermediary tungsten product, have risen 50 percent in the last year to highs last seen in late 2001.
"We don't have any licences, and material is very tight because some state-owned mines have suspended production for maintenance," an official for a large producer said.
European consumers of tungsten, also used in making tool steel and filaments in electric light bulbs, had enough stocks to last until the end of the year and were waiting until January before seeking new shipments from China, traders said.
China's Ministry of Commerce said in late October it would permit exporters to ship 16,300 tonnes of tungsten next year, 30 tonnes less than the total export quotas issued for 2004.
Producers and traders would be issued with their individual quotas within this total by the end of December, they said.
Although the 2005 quota, which covers tungsten metal content in a variety of products, including APT, oxide and carbide powders, is almost unchanged from this year, it is around 4 percent lower than in 2003.
China is encouraging increased domestic consumption of APT to feed its fast-growing steel and tool-making industries.
Chinese suppliers were offering spot APT to European customers at between $90 and $92 a metric tonne unit. But they said no new contracts had been signed in the last few weeks.
For the last three months, APT has been steady at between $88 and $90 a metric tonne unit, a measure equivalent to one-hundredth of a tonne.
Mines owned by Jiangxi Tungsten, a joint-venture headed by state-controlled trader Minmetals Corp, were operating at only one-third of capacity and would continue to do so until the end of the year, industry officials said last month.
Traders and producers said this and other mine stoppages had pushed up the price of tungsten ore by around 5 percent in the last month, to 42,000-43,000 yuan ($5,075-$5,196) a tonne from 39,500-40,000 yuan in November.
"But when you say you can pay 42,000 yuan, the seller will then say 'I'll sell you it for 43,000'," a buyer in southern China said.
China's largest tungsten producers include Jiangxi Tungsten, Xiamen Tungsten and Zhuzhou Cemented Carbide Group Corp.
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