Global Helium Prices Likely to Climb Higher as Unplanned Outages Send Shock Waves to Supply Dynamics

Market dynamics for Helium seemed adequately supplied in mid-Q2 and demand remained healthy worldwide. However, the market outlook changed drastically entering June when three key plants located in different regions across the globe stopped production as producers faced issues in smooth operations at the facilities.

Operations at the state-owned Sonatrach were abruptly stopped on 11^th June when a gas turbine control mechanism failed at its Skikda LNG plant in Algeria. Plant outage meant feed gas for Helium was cut short unexpectedly resulting in production stoppage thereby removing significant amount of Helium from the global supply chain. The Skikda plant of Sonatrach also stopped production in 2020 due to technical issues which also resulted in extension of its maintenance period.

Another event took place at Keyes Helium plant in Oklahoma, USA which also went offline due to a broken turbine. According to estimates, the repair work could take several months to bring the plant back online which also resulted in sizeable Helium cuts from the global supply chain. This event comes against the backdrop of projections by Bureau of Land Management (BLM) as per whom Cliffside Helium reserve will be completely depleted by 2021 due to non-availability of feedstocks. BLM operates and maintains a Helium storage reservoir, enrichment plant, and pipeline system near Amarillo, Texas, and supplies nearly 40 percent of the US Helium demand. The reserve forms the critical feedstock reserve for the Keyes Helium Plant whose viability may come in question given the quantum of depletion.

Also, recently BLM discontinued withdrawals of crude Helium from its crude Helium pipeline when the pressure in the pipeline dropped significantly. BLM also shut down its Crude Helium Enrichment Unit in early July to address safety issues. Earlier, issues were likely to be resolved by the month end, however Covid scare delayed the plant restart to mid-August.

These incidents together removed more than 1 billion cubic feet (BCF) of Helium from the global supply chain, sending supply dynamics into doldrums. Germany, USA, and China are the key markets across the major regions in terms of market share and are likely to cope with supply challenges in coming weeks.

Global Helium supply chain has been fragile since the beginning of the pandemic when demand deteriorated severely and now it has been caught inadequate to these supply shocks. Spot prices have already gone northwards while the impact on contract prices will be subjected to duration of the supply crunch.

As per ChemAnalyst, “US was the leading producer of Helium gas across the globe in 2019, holding more than 65% share in the North American Helium market. Air Products and Chemicals Inc, Air Liquide and Linde AG are the key companies purifying and marketing Helium across the world.”