A two-year helium shortage has officially ended, but market stability remains in question as supply continues to remain uncertain.
Phil Kornbluth said: "Helium shortage 4.0 is over. It's not that it might end, it's that it's already over."
A surge in helium supplies through early 2024 has made it easier to get new inventory. Gazprom is increasing global supply by adding about 50 11,000-gallon containers per month, a 10% increase. Major helium suppliers have also ended their allocations.
Kornbluth noted that while demand for helium in semiconductor manufacturing is starting to recover, it is still below 2022 levels. "Some markets are oversupplied, especially China, where an influx of cheap Russian supply and weak electronics demand has created market dislocations." Although China is the second-largest market, it is currently the least profitable.
Helium contract prices are experiencing "reverse currents." Prices for new contracts and renewals have softened, while existing contract prices remain near historical highs, with prices rising due to cost pressures facing major suppliers.
Reasons for the shortage
After 16 years of frequent shortages, 2022 was expected to be the year when the helium market finally transitioned to ample supply with the opening of Gazprom's Amur plant, but a series of unexpected events such as explosions, fires and power outages severely hampered the recovery.
"After a brief start-up at the Amur plant, a fire in October 2021 and a serious explosion in January 2022 delayed the entry of the Amur plant into the market until December 2023."
BLM also experienced a major power outage between January and June 2022, which reduced market supply by about 15%.
These factors, combined with a number of other supply disruptions occurring at the same time, led to the shortage.
2024 Outlook
Kornbluth said that supply will continue to be ample in 2024, depending on the performance of Russia's Amur plant. “Amur is expected to supply 500 million to 600 million cubic feet (MMCF) to the market. Amur is still relatively new, so we have to see if they can produce reliably.”
New EU sanctions could disrupt the market by limiting the supply of Amur gas. However, the market is expected to be boosted by increased demand for electronics and the upcoming commissioning of the Freeport LNG facility in Texas, which will add about 200 million cubic feet of gas to the market through an offtake agreement with Linde.
"We expect price volatility to continue, with unchanged prices on existing contracts but softer prices on new contracts and renewal business," Kornbluth added.
Despite the new supply, the helium market remains fragile and vulnerable to sanctions, geopolitical risks and plant outages.
