Global demand is estimated to be around 6 billion cubic feet (Bcf) per annum with the compound annual global growth rate (CAGR) at some 3%. The current global market for bulk liquid helium is thought to be worth over USD2.7 billion, with the unit price (USD per thousand cubic feet) rising by over 135% in the past two years. The requirement for helium is currently increasing, mainly in the medical, technology and aerospace sectors – for MRI scanners, particularly in the developing world, as well as superconductors and for pressure purging (Space X and NASA).
Source: Macro View by Edison Investment Research (Feb 2019)
Helium is a vital resource, essential in modern technologies with major critical and irreplaceable use throughout the science, medicine and manufacturing industries. There is growing demand for helium in various high-tech applications such as cryogenics, welding and pressure & purging, in addition to more recent developments which include hybrid air vehicles, helium-filled hard drives, and Space Exploration.
Its unique properties make it an essential component in cryogenic, heat transfer, shielding, leak detection, analytical and lifting applications. There is no substitute for helium in applications where temperatures below -261.1°C (-429°F) are required. It is therefore the most important element in studying super-cold conditions in low-temperature physics studies. Helium is a critical component in the manufacturing process, specifically ones which serve unique high-tech applications in MRIs and semiconductor chip manufacturing.
Major factors driving the market are the increasing consumption of helium in the electronics and semiconductor industry as well as the growing usage in the healthcare industry. Space is another key growth area, as well as quantum computing.
The main global industrial consumers of liquid helium are the medical, aerospace, and electronics industries. The medical industry is the largest consumer and mainly uses helium to maintain the superconducting properties of magnets in applications such as magnetic resonance imagery (MRI) and nuclear magnetic resonance spectrometry (NMR) equipment. The demand for MRI scanners is increasing, especially in the developing world.
As scientific developments advance, so too does the need for helium increase.
Market Demand & Supply
The helium market has been finely balanced in recent years with global shortages between 2006 and 2007, and 2011 and 2013. The US is the world’s largest producer, accounting for roughly 40% of supply. However, the US National Helium Reserve in Amarillo, Texas, the world’s single largest source of helium for the past 70 years, is now exhausted. Where will the replacement helium come from?
Estimated global supply/demand forecast, mmcf/year.
Source: Edison Research Helium Macro View Update, Feb 2019
Historically, the largest reserve of crude helium was owned and managed by the US Bureau of Land Management (USBLM) and is located in Amarillo, Texas. This reserve was set up in 1960 as a strategic repository of helium. The US reserve represented the only large volume dedicated helium reserve (i.e. not indexed to the production of hydrocarbons or CO2). In 1996 a bill was passed by the US Government to sell off a large part of the supply and pay off the plant’s debts, leading to a fall in helium prices. In 2013 the USBLM announced that it would begin to auction off an increasing percentage of the reserve annually as part of the bill.
The USBLM held its FY 2019 Crude Helium Auction in Amarillo, Texas, with the price rising 135%, from $119/Mcf in 2018 to $280/Mcf in 2019. It was the last crude helium auction by the USBLM as the Federal Reserve of crude helium reached the minimum level of 3Bcf. The sale of crude helium to private industry has been discontinued and the remaining stockpile for Federal users only.
Closure of the USBLM reserve has removed a significant portion of helium supply from the market as it experiences continued growth. A helium shortage is forecast for 2020, causing a forecasted price rise. It is clear that the private spigot prices are materially above the BLM crude pricing, with bulk liquid helium well above this level. Prices rise the closer you get to the consumer, with HP cylinder prices currently up to 10 times the wholesale price. (Helium – Macro View by Edison Investment Research Feb 2019).