Helium: Markets Re-imagined.
Helium: Markets Re-imagined, Part 1, is a webinar presented by helium expert and President of Kornbluth Helium Consulting, Phil Kornbluth, discussing all things helium including the potential for increased market volatility during the current Russia/Ukraine conflict.
With recurring shortages of helium since 2006, 2022 was set to be a year of transition to more plentiful supply with operations commencing at Gazprom’s Amur facility in Eastern Siberia. A fire at the facility in September 2021, followed by an explosion and another fire on 1st January 2022 created uncertainty over short-term supply of helium.
Prior to the event termed ‘Helium Shortage 4.0’ long-term expectations of Russia’s helium market were set to increase, with production expected to jump from just 3% in 2021 to 26% by 2025.
The helium sector now faces new challenges with the Russia-Ukraine war creating unforeseen consequences for supply and distribution of helium gas. Additionally, the Amur plant was expected to reopen this year, but given the turbulent nature of the region’s politics, Mr Kornbluth sees this as increasingly unlikely.
“There is some aspiration to try to get the plant restarted before the end of the year, but that may or may not happen,” he said. Adding, “It’s clear that this year is going to be another year of tight supply conditions, shortages, supply allocations and elevated prices.”
Helium prices are anticipated to stabilise slightly over the short term when the US’ Bureau of Land Management (BLM) – which is currently ‘prudently’ allocating resources – resumes normal operations.
Can the Russia-Ukraine crisis and sanctions affect global helium supply?
The unpredictability of the helium market has been exacerbated by the ongoing crisis in Ukraine, however, in the short term Kornbluth believes that the conflict will not have a ‘big impact’ on helium supply over the next 12 months.
“Nobody’s expecting much out of Russia anyway but, longer term, it becomes very difficult to do business with Russia and from that point it could have a big impact,” said Mr Kornbluth.
Longer-term supply could prove more challenging, as it will take much longer to get Amur repaired and restarted, with the effect of ongoing international sanctions against Russia uncertain.
“The conflict brings home the importance of factoring in political risk and ensuring a supply portfolio that is not overly exposed to geopolitical events,” says Kornbluth.
This disruption will influence global helium supply for a while as events over the past few days have seen Russia’s main bank, Sberbank, plummet 94% on the stock market following its departure from the EU. Additional sanctions have also seen Gazprom and other Russian energy conglomerates removed from the London Stock Exchange.
Covid-19 and Helium
When discussing the impacts at the onset of the Covid-19 pandemic, Kornbluth reported that demand from China – the world’s second-largest helium market – was reduced significantly after the Chinese economy was put on lockdown in response to the pandemic.
In other economies such as the US, mandatory ‘social distancing’ saw the demand for party balloons which represents up to 15% of US helium demand and approximately 10% of global demand, decrease significantly.
The lockdown of the Chinese economy has caused congestion at ports, and has also affected the ability of major helium suppliers to get empty containers out of China and back to sources in Qatar and the US for refilling, thus causing negative impacts on the helium supply chain. However, fast-forwarding to 2022 and the impact of Covid upon helium supply seems to have somewhat diminished.
“Varying levels of demand loss due to Covid has pretty much returned to the market,” said Kornbluth. “I think there’s probably been a bit of demand destruction from the last shortage, but I think the impact of Covid on demand has largely gone away,” he said.
The helium industry has made promises that future helium supply would be less unpredictable and Kornbluth was asked, considering recent events, if supply would stabilise.
“I hope so, but we have a way to go before we get to that point. There’s going to be another big plant in Qatar and I hope the helium supply later in the decade is going to be much more reliable,” said Mr Kornbluth.
Source: Phil Kornbluth – Korbluth Helium Consulting