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Helium prices balloon as supplies run out

File photo of a balloon seller at the Tokyo Disneyland greeting visitors in 2011.

Story highlights

  • Global production of helium has sharply fallen this year in the US and Algeria
  • Sale of inflatable Mickey Mouse heads at Disneyland in Tokyo suspended
  • Companies in Japan, the world's leading helium importer, are looking for alternatives
  • Squeeze represents the second big shortage for the $500m helium market in five years
A global shortage of helium, the lighter-than-air gas, has put a stop to the sale of inflatable Mickey Mouse heads at Disneyland in Tokyo, threatened parades during the US Thanksgiving holiday and disrupted university research.
Global production of helium -- used in industrial and medical applications, as well as balloons -- has sharply fallen this year in the US and Algeria, the two biggest exporters.
Companies in Japan, the world's leading helium importer, say they are looking to tap alternative, but more expensive, sources of supply in Qatar, Russia and Poland.
However, because the supply disruptions come as demand in China and India is rising, the global market remains "tight", said Shi Quan, a trader in Shanghai. The squeeze represents the second big shortage for the $500m helium market in five years, after glitches in 2007 at a plant owned by ExxonMobil. Now, the focus is again the US, which provided almost four-fifths of the 180m cubic metres of helium consumed around the world last year.
The shortfall has been triggered by maintenance of ageing US installations, including a pipeline system that connects a helium-rich natural gasfield in Amarillo, Texas, with processing plants.
In Algeria, too, supplies of helium have dropped alongside shipments of liquefied natural gas to Europe. Helium in Algeria is extracted during the liquefaction of natural gas, so when demand for LNG drops, as this year because of the economic crisis in Europe, helium production also drops.
Helium prices have risen steadily over the past decade. In the US, benchmark helium prices have risen this year to $84 per million cubic feet, up nearly 70 per cent from the $49.50 per mcf in 2000, according to the US Bureau of Land Management.
Industry executives believe that prices would need to increase significantly more to spur the development of more supplies, probably through expensive technologies for extraction of the gas.
Japanese importers are struggling to adjust. Two weeks ago Saitama-based distributor Daito Gas said it could take no more orders for helium after shipments came to a halt.
Taiyo Nippon Sanso, the country's biggest importer, says its helium volumes have dropped by 30 per cent since June, and that the outlook may not improve until the third quarter of next year, when a joint venture with a gas drilling firm in Wyoming is scheduled to begin production.
Until then, said spokesman Masayuki Kuniya, the company would prioritise deliveries to MRI clinics -- which use liquid helium to cool superconducting magnets -- and factories making semiconductors and fibre optic cables.
Meanwhile, the nation's children may have to go without. Last week Oriental Land, operator of the Disney resort east of Tokyo, suspended sales of helium-filled balloons for the first time.
Kunio Komada, an executive at Dream Balloon, a Tokyo retailer, complains that his helium stock has dwindled to nothing, following big cuts in the spring and summer. "If supplies don't come back soon, our business will be very tough," he said.