WORLD MARKETS
Cutting tool suppliers hit by increased raw material costs
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 of up to 100% in one year.
R The most affected item is tungsten carbide, a
key ingredient for hard metals. According to mid-2009 Metal Bulletin reports, the price of the most popular tungsten-based commercial product (ammonium paratungstate, Apt) at the peak of the crisis was around $200/t, while in May 2011 it reached $480/t. At present, month- on-month price increases by more than 15% are not unusual. Slight price decreases for cobalt, used as binder for hard metal (HW) cutting edges, cannot compensate for the overall price increase. There are multiple reasons for this price rally, especially for tungsten. About 80% of global tungsten ore production comes from China. Only 60% 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 re- opening a few mining sites outside China. However, it will be 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 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.
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 the current 35%. 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
favourable economic trend keeps demand high and supply 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.
aw material shortages and consequent price increases are putting precision tool manufacturers under strong pressure.
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 chip-forming tool costs also varies. Cutting edge costs in an HW tool may range from 20- 60%. 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.
Tungsten carbide necessary for wood machining tools has become more and more expensive making life tough for tool suppliers
International Forest Industries | AUGUST/SEPTEMBER 2011 13
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68