Tungsten prices surge to $3,000 per metric ton, pushing oilfield equipment producers to adopt cheaper steel alternatives.
U.S. drill bit manufacturers are accelerating production of steel-body bits to offset soaring tungsten costs. Tungsten prices have surged from $600 to $3,000 per metric ton since October due to Chinese export restrictions and rising military demand, increasing expenses for oil and gas companies.
The shift aims to reduce costs as drill bits, though a small portion of well expenses, are critical for drilling operations. Industry spending on drill bits reached $3.4 billion last year, with tungsten price hikes potentially adding $1 billion to costs in 2024. Steel-body bits could cut prices by up to 25% if adoption increases.
Higher equipment costs may slow U.S. output growth despite rising crude prices above $100 a barrel, as producers face tighter margins.