Helium expert Phil Kornbluth explained a likely oversupply of helium will lead to “a pricing plateau for some time” in the latest gasworld TV webinar sponsored by Evonik.
Part two in the series called Helium: Understanding the Market in 2020, hosted by Rob Cockerill, gasworld’s Global Managing Editor, focused on the impact of Covid-19 on the global helium industry, and what the future may hold.
Helium supply and demand was turned on its head by the global pandemic which swept across the world early this year.
Kornbluth, President of Kornbluth Helium Consulting and who has been employed by several leading industrial gas companies over the last 38 years, explained how Helium Shortage 3.0 was brought to an abrupt end and is optimistic about plentiful supply in 2021.
“Shortages could be over for an extended period as long as new supply enters the market,” Kornbluth told gasworld TV.
“I don’t want to completely discount the possibility of shortages could return if new supplies are delayed. But oversupply looks more likely than shortages once Amur [Gazprom, Russia] enters the market. Helium prices are in a plateau phase and steep increases are over for this cycle. When new supply enters the market I would say that prices are likely to turn down again subject to the timing of the new supply.”
Kornbluth added, “The more likely scenario as long as there are no maintenance outages, is you would expect there to be oversupply in the market. When there’s a shortage, prices go up, when there’s an oversupply prices tend to go down, so I would expect prices to soften if there’s an oversupply. We are at a pricing plateau and that could last for a while.”
Demand for helium is still recovering, according to Kornbluth.
“Demand is still well below pre-Covid levels,” he said.
“My view is it will take at least a year or more for helium demand to get back to pre-Covid levels.
“The major participants in the market have generally downplayed the current oversupply but there’s a fair amount of uncertainty as to what happens next. The market is on a wait-and-see mode. The surplus is diminishing as economies recover from Covid-19 and helium demand recovers. It stands to reason that the surplus will diminish, but there is expectation for significant new capacity entering the market next year.”
Kornbluth went on to discuss the new major sources in Qatar and Russia, which he expects to start up in first quarter of 2021, and second half of 2021, respectively.
Kornbluth said, “I’m calling it the thread the needle scenario, which is we don’t go back to shortages, we do have a diminishing surplus, but the shortages don’t return and I would say that’s a 60-70% scenario. But if there are delays with the new sources coming on, we could certainly see tight markets again. Longer term, post 2021, the outlook is a lot more positive for helium users. The pipeline for new projects is robust.”
Kornbluth says with the startup of new sources in 2021, helium shortages are unlikely to strike again for a while.
“After Amur [Russia] gets into the market, there’s a likelihood of oversupply than shortages, and when I look through to the mid-2020s, I don’t see why there’s going to be shortages, it looks like the reverse,” Kornbluth said.
Semiconductor industry driving future demand
Mike Corbett, Managing Partner, Linx Consulting, a consultancy focused on electronic chemicals and materials and related thin film processes, said helium demand will be driven in the future by high-tech applications such as the semiconductor industry.
As well as helium supply, the semiconductor industry has unexpectantly improved because of the trends caused by the pandemic.
“The impact of Covid-19 has been very positive for the semiconductor industry, which was unexpected,” Corbett told gasworld TV.
“Typically, Covid has been devastating economically. Usually what happens in most recessions is that consumers cut spending on discretionary items including technology items and for businesses to delay investment in technology items. But in Covid, we are witnessing new behaviours like work from home, or remote learning, which have led to a spike in spending on technology.”
Corbett continued, “With a typical recession this year would be down 10% for the semiconductor industry. It’s actually up for the semiconductor industry this year and it’s up in the segments that will consume the most helium overall. We are seeing a surge in demand for semiconductors. We see the strongest growth are in the most advanced chips. Helium is a key gas that is utilised in a lot of these advanced semiconductors processes or wafer fab operations, where it’s about processing the wafer. Helium is also typically tied to a lot of vacuum processes and some of the key applications we see for helium would include carrier gasses, specialty gas blends, leak testing.”
Corbett is confident we will see strong growth in demand for helium in the years ahead, driven by the semiconductor industry.
“We expect to see increased demand for helium going forward because of the growth of semiconductor plants,” Corbett said.
“The demand for advanced semiconductor plants is being driven by vertical scaling… which means you are making the devices smaller and when you do that you use a lot more vacuum processes.”
Corbett added, “Over the next several years driven by continued strength in semiconductor market we expect demand to go up by 50% over the next four or five years. And this will be driven by the continued production and demand of semiconductors at the most advanced technology nodes and continued investment and building out of the semiconductor industry. Right now, there are about 200 of the most advanced semiconductor fabs which use 300mm wafers as a starting point, and those are going to be the big consumers of helium. They will be operated by companies such as Intel, Taiwan Semiconductor Manufacturing Company (TSMC), Samsung, SK Hynix, Micron.”