Coronavirus (Covid-19) has changed our lives and disrupted business, shifting demands since the start of the global pandemic in March. Helium entered 2020 in short supply, but has the impacted of Covid-19 changed the supply-demand balance? And what is driving demand?
To gain some insight on the global helium supply-demand situation, how the market was impacted by Covid-19, gasworld asked an industrial gas major, smaller helium producers and established helium equipment manufacturers for input. Those featured here are:
Steve Eckhardt, Vice-President, Global Helium at MATHESON Tri-Gas, the US subsidiary of Nippon Sanso Holdings (formerly TNSC) which supplies bulk liquid helium ISO containers to customers around the world. MATHESON sources helium from the US, Middle East, and Europe and will source helium from east Asia in the future. MATHESON supplies helium in tube trailers, cylinders and liquid dewars from multiple locations across the US.
Jeremy Jordan, SVP-Commercial of Dallas-based IACX Energy, which operates smaller helium producing plants across six US states and one Canadian province.
Nick Snyder, Chairman and CEO of North American Helium, a helium exploration and production company. It started up its first helium plant in July, and another is set to come online by mid-2021.
Joe Arencibia, President and CEO of Arencibia, which supplies and recycles gases for 3D printing, including MARS Helium, a recovery service that addresses the unique challenges of helium recovery.
Vince Grillo, Co-President Sales, of New Jersey-based Cryofab, which manufactures cryogenic products such as helium dewars for research, medical, biotechnology, superconductivity, semiconductor, and cryopreservation.
How has your company been impacted by Covid-19 from a helium point of view?
Steve Eckhardt: When there is such a dramatic change in demand, the supply chain needs to be carefully managed as customers immediately start holding on to containers for a longer period. Normally, any change like this is over time and varies by geography. With Covid, the impact was immediate and nearly everywhere.
Jeremy Jordan: IACX has been minimally impacted by Covid-19 from a helium perspective. During the early stages of the pandemic, we experienced some logistical challenges due to a few of our customers’ facilities being temporarily shut down by the pandemic. However, IACX was ultimately able to persevere through that period, benefiting from its flexible production sources, numerous offtake markets, and access to storage.
Joe Arencibia: The commercial aerospace market is certainly suffering broadly due to Covid-19. The military and defence market has been a bit more resilient, as have most of our other market segments. That said, Covid-19 has generally caused all of our market segments that rely on helium to sharpen their pencils and identify further operational cost saving opportunities. As a result, large scale gas recovery has become a strategic priority and we are the clear market leader in noble gas recovery. So, interest in industrial gas recovery from Arencibia has actually increased significantly the past few quarters, because our delivery model eliminates virtually all of the capital cost and operating risk to our customers.
Vince Grillo: Initially Covid-19 caused an abrupt end to what was at first a promising start to 2020. We suffered through two months of little activity March through April. Once organisations became somewhat acclimated to the necessary changes required for continued operation, the phones began to ring again. An article that I have read, I believe in gasworld, claimed the pandemic actually was partially responsible for the easing of the liquid helium shortage. Given the easing of the shortage, inquiries for liquid helium equipment have increased.
When do feel the low point was in terms of helium demand?
Steve Eckhardt: Demand rebounded this summer after a dramatic reduction in April and May. The rebound in demand has varied based on geography. For example, demand in China was barely impacted so demand has remained relatively flat. In Europe and the US, demand declined more significantly, so these geographies have experienced a major rebound in demand in the last several months.
Jeremy Jordan: April and May were the most challenging months.
Joe Arencibia: It’s hard for us to say at a global level. We focus on targeted applications with high-volume users. For those segments, it doesn’t look like we’ve reached the low point yet. That said, we are seeing some data that suggests supply may be catching up to demand a bit sooner than expected.
Vince Grillo: For us, anytime there is a shortage, demand and inquiries fall off. The last two years and especially March through June of this year have been low points.
Which applications were impacted most severely?
Steve Eckhardt: It appears helium use in offshore diving and manufacturing were impacted the most.
Jeremy Jordan: IACX is predominantly a wholesale supplier of helium to national and regional distributors who, in turn, serve multiple verticals. Concurrently, IACX also serves a number of end-user customers. While this diversification muted the overall effects of Covid-19 on IACX as a whole, IACX’s customers in the manufacturing sector were impacted the most severely; this was primarily as a result of involuntary facility shutdowns.
Joe Arencibia: Upstream metals production and alloys for commercial aviation have seen significant impacts; less so for military aerospace. On the semiconductor side, demand has softened somewhat and production volumes reflect that.
Vince Grillo: Certainly distribution, our largest outlet for portable dewars takes a hit when there is a shortage. If liquid is unavailable then why would you purchase dewars and transfer equipment?
To what extent has your helium demand recovered thus far?
Nick Snyder: Our customers are most interested in our ability to provide secure and reliable long-term supply of helium in North America, with an emphasis on the non-hydrocarbon nature of our helium sources. If anything, we have seen an increase in demand for this type of supply over the last 12 months due to various geopolitical factors.
Joe Arencibia: In the markets we serve, demand hasn’t recovered yet in a significant way. And most customers recognise that even when it does recover, pricing and availability remain long-term issues with helium. The core issue is that, for certain applications, it is extremely difficult to adapt your process to shift away from helium. This is one reason why large-scale helium recovery is so important. And in the austerity environment Covid-19 has created, finding a way to rely long-term on helium at a significantly lower cost basis becomes critical.
Do you expect helium demand to recover fully – and if so, by when?
Steve Eckhardt: Helium demand will fully recover and then exceed pre-Covid levels as electronics, fibre optics and aerospace applications drive additional growth. Timing will likely be linked to the global economy so we watch the global growth metrics.
Jeremy Jordan: IACX’s helium deliveries are back to pre-Covid levels. Continued growth in the MRI, high-tech manufacturing, and aerospace markets will allow the rest of the helium industry to recover. A healthy growth trajectory for the global economy, coupled with a return to larger group functions, will also help the broader helium market recover.
Nick Snyder: We expect helium demand to continue to grow over time, driven by demand for semiconductor manufacturing and commercial space exploration as well as some new technologies that are now maturing that will contribute to forward demand growth.
Joe Arencibia: We and our customers would love to know the answer to that question. Many consultants have opinions. We prefer not to speculate. Obviously, demand for air travel and consumer electronics will play significant roles in any recovery.
Is Helium Shortage 3,0 over?
Jeremy Jordan: Since IACX’s current footprint resides entirely in North America, we cannot speak to the state of Helium Shortage 3.0 on a global basis. Within North America, however, Covid-19 certainly seemed to allow helium supply to catch up to demand on a temporary basis.
Nick Snyder: To the extent that a number of anticipated international hydrocarbon-linked helium sources come online on schedule, we think the world should be adequately supplied with helium overall, and that the focus will shift towards a focus on security of supply and ESG concerns, as it has with other commodities.
Joe Arencibia: We’ve certainly seen a short-term balancing due to depressed demand, whereas, until recently, everyone was simply waiting on increased supply. But we think a narrow focus on supply-demand balancing misses the bigger picture here. Even when demand rebounds and new supply comes available from Qatar and Russia, the key risks our customers face don’t go away. For instance, commodities managers don’t want their critical materials dependent on unstable geopolitical regions. So, while many large helium users know that new capacity will balance demand at a macro level, they’ve heavily discounted what that means to their actual business operations and know they need to continue to operate with a scarcity mentality.
Vince Grillo: I believe it is close to being over and new sources are close to operational.
Are there any new applications you think will start driving helium demand in the near future?
Jeremy Jordan: We are not aware of any new applications that will alone accelerate helium demand in the near-term. With that being said, we believe growth from existing applications – MRIs, electronics manufacturing, aerospace, and others – will continue to result in healthy demand, which IACX is already seeing from its helium customers.
Nick Snyder: There are exciting things happening in the small modular reactor (SMR) space and a number of companies – as well as countries – are pursuing helium-cooled nuclear reactor technology. This probably won’t have much of an impact in the 1-5 year timeline, but it could be a major driver of additional demand for helium in the 5-15 year timeframe.
Joe Arencibia: Absolutely. Developments in additive manufacturing, new alloying, and improvements in semiconductor production processes will all impact future helium demand.