As we close out 2019 and look toward 2020, Helium Shortage 3.0 continues to be the primary focal point for gas companies who trade helium or end-users who rely on helium in their businesses.
With Helium Shortage 3.0 dating back to February 2018, the helium supply deficit will be nearly two years old at the start of 2020. However, unlike the last two years, there is finally reason for optimism as we enter 2020.
Kornbluth Helium Consulting believes that the odds favour an easing of the shortage during 2020, as long as two significant new sources that are expected to commence production come to fruition. The expansion of Air Products’ Arzew, Algeria source, could add at least 200 MMCF per year of new capacity as early as Q1 2020, while production from the 425 MMCF per year Qatar 3 Helium Plant is expected to commence sometime in Q3.
While it may take some time for these sources to reach their full capacity, they could easily combine to add up to 6-7% to world supply before the end of 2020. This new capacity would certainly contribute to a significantly reduced shortage by the end of 2020. In fact, if there is a material amount of ‘demand destruction’ caused by Helium Shortage 3.0, or an economic slowdown in some of the world’s major economies, a tight balance between supply and demand could be restored by the end of 2020. The bottom line is that the worst of Helium Shortage 3.0 is probably behind us and there is reason for optimism that the helium supply situation will improve in 2020.
Of course, the supply picture also has implications for the price of helium. Helium prices at the end-user level continue to be in an uptrend as we enter 2020, but it is safe to say that the sharpest increases in price have already been absorbed by the market. Prices for this cycle may peak before the end of 2020 as the market becomes more competitive in anticipation of significant new supply from Gazprom’s Amur Project, which is expected to enter the market in mid-2021.
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