Helium supply a risk factor for MR OEMs and operators

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Helium supply a risk factor for MR OEMs and operators

September 12, 2018
From the September 2018 issue of HealthCare Business News magazine

Helium supplies have been relatively tight since June 2017, when Saudi Arabia, the UAE, Egypt and Bahrain announced an embargo of Qatar, which resulted in the temporary loss of almost 30 percent of the world’s helium supply from the market. While Qatar production restarted after an outage of about three weeks, helium markets have remained relatively tight since then and the markets flipped into a shortage situation in February 2018 as demand picked up after the seasonally slow holiday period and several plant maintenance outages negatively impacted supply.

So where are we today? Two of the five major global helium suppliers have been allocating supply to their customers since late winter, and all of the other suppliers are experiencing tight supply. The global helium supply chain is much more “fragile” than it used to be, as the U.S. government’s Federal Helium Stockpile is nearing depletion and the Bureau of Land Management’s (BLM) Crude Helium Pipeline and Storage System is no longer capable of providing significant flex capacity to stabilize the helium market.

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Depending upon who you rely on for supply, you might experience shortages or helium allocations. Fortunately, helium supply to the MR market segment, due to its medical importance, is given a higher priority than other applications (e.g., party balloons) where a lack of supply would have less dire implications (unless you own the party store).

Given the tight supply, it is again a seller’s market, and the price of helium will again be trending higher. It is also not a bad time to take a close look at the security of your helium supplier’s supply portfolio and to consider dual sourcing if you want to reduce your exposure to supply allocations or disruptions.

Future supply outlook
Unfortunately, helium markets are expected to remain tight for the next couple of years, as there is modest growth in demand, continued loss of capacity from sources connected to the BLM Pipeline and no major new sources of supply expected to enter the market until the Qatar 3 source commences production (hopefully) in mid-2020. During this period, helium markets will likely experience occasional periods of shortage, especially when production is reduced due to plant maintenance outages. Helium prices are likely to trend higher during this period.

In mid-2021, Gazprom is expecting to commence production from a very large new source in Siberia that has the potential to restore a heathy balance between helium supply and demand and possibly create an oversupply situation as it ramps up production. The Amur Plant will eventually produce 2.1 billion standard cubic feet (BCF) of helium per year from three 700 million standard cubic-foot helium liquefiers. The first of these liquefiers is expected to start up in 2021, with the second unit expected to start up in 2022 and the third unit expected to start up in 2026/2027. To put this in perspective, current helium supply is approximately 7 BCF per year, so a 2.1 BCF increment is quite significant.

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