From party balloons to MRI scans, the Iran war’s helium cost is coming
Filling up birthday balloons with helium for your child’s next birthday party might be a little more expensive than it already is. That’s because America’s war with Iran has helium prices set to rise significantly.
Helium usage
When it comes to helium, it’s not just birthday balloons that are affected. In fact, party balloons only account for about 5-7% of helium usage.
But that’s where most Americans will feel any significant impacts.
“With party balloons, you might notice that the cost went up, or you just couldn’t get the helium,” Phil Kornbluth, president of Kornbluth Helium Consulting, told Straight Arrow News. “For whatever reason, the party store ran out, so, that would be what the man on the street would notice.”
Kornbluth said while balloons are a small percentage of the industry, it’s “90% of the public awareness.”
What the public may not be aware of is the many other uses of helium, including MRI machines, scientific research, manufacturing and more.
The most common application is cryogenics, meaning things like semiconductor manufacturing and high-tech welding.
“That’s a growing application,” Kornbluth said. “Helium is indispensable for chip manufacturing.”
While the public isn’t typically involved in chip manufacturing, roughly 40 million MRI scans are done every year in the U.S. Just one scan uses the equivalent of nearly 212,000 balloons.
“MRI is the second biggest application,” Kornbluth said. “It’s been declining slowly.”
While that may be declining, helium usage is growing in other sectors, including aerospace.
“It’s used to purge rocket engines and pressurize the hydrogen fuel, but it’s got a host of applications,” Kornbluth said. “It’s used in optical fiber manufacturing. It’s used for nuclear power plants, for cooling. It’s used for leak detection, gas chromatography, welding, finding gas.”
William Halperin is a professor of physics and director of cryogenic facilities at Northwestern University. He and his team use helium in scientific research and other applications in physics, chemistry and biology.
He received a notice on March 25 about his helium supply.
“I just received, a few minutes ago, a notice from my supplier for helium that the price is going up immediately by 10%,” Halperin told SAN.
He believes the impact on research like his could also indirectly reach the public because of its impact on what’s called quantum computing.
That’s an emerging field using quantum mechanics to solve problems too complex for classic computers and benefits areas like drug development, cryptography and more.
“The evaluation of products, both for health care, chemical products for applications, and physics, which requires liquid helium that’s low temperatures, is very, very important for what’s called quantum information, that is, the aspirations to create quantum computing,” Halperin said.
Price increase
How does the ongoing U.S. war in Iran impact prices that significantly?
“The war has taken about 30% of the world’s helium supply offline because the helium from two of the plants in Qatar is produced as byproducts from the LNG [liquified natural gas] plants,” Kornbluth said. “The LNG plants are shut down because the Strait of Hormuz is shut down.”
Iran closed the Strait when the violence began.
“There’s no way to get the LNG to market, so it’s a force majeure situation,” Kornbluth said.
QatarEnergy has flagged LNG “force majeure,” which is contractual language meaning things outside of a party’s control allowing it to break an agreement. The declaration allows it to freeze some of its liability for fulfilling contractual obligations because of attacks in the Ras Laffan area of Qatar.
Those attacks wiped out 17% of Qatar’s LNG export capacity, which Reuters reports is at a cost of $20 billion.
“QatarEnergy said they’re going to be out of production for a period of years. So, obviously, that’s bad,” Kornbluth said.
Another part of the issue experts pointed to is that there are no signs of this war ending anytime soon.
“If Ras Laffan incurred a lot more damage, that’s a lot more of a long-term problem for the industry,” Kornbluth said.
While Halperin is already feeling the effects, Kornbluth acknowledged the price increase won’t be seen overnight in most cases.
“The impact is actually delayed, because the helium gets produced, and it takes weeks to get to market, right?” Kornbluth said. “So, it’s not like anybody didn’t get their helium delivery from Qatar yet, but there is some impact, because a couple of the major suppliers have implemented allocations, which is rationing, because they’re trying to preserve supply for down the road.”
The helium business is also mainly a contract business. So, while the spot price of helium has already risen, that may not affect pricing just yet.
“Spot market normally accounts for about 2% of demand, and it’s probably spiked up now to 4%,” Kornbluth said. “So even if spot prices double, that’s not the same thing as contract prices doubling.”
No matter what, helium is on the rise.
“Prices will go up, don’t get me wrong,” Kornbluth said. “I’m not saying they won’t, but it’s not going to be as fast and sensational.”
What can be done?
While major suppliers have begun rationing for what’s to come, a lot of what can be done will depend on what happens with the war, especially with closed shipping channel.
“Getting the Strait of Hormuz open so the LNG production could restart,” Kornbluth said when asked what could be done in the short-term.
Meanwhile, there are other suppliers of helium. The U.S. and Qatar have the two largest helium reserves in the world. That’s followed by Algeria and Russia.
Dipping into other countries may help offset some of these issues but also can come with other problems.
“There are some sanctions on Russian helium,” Kornbluth said. “If there was a temporary exception by the European Commission or by the U.S. The U.S. doesn’t sanction Russian helium, but they sanction the use of American manufacturing containers to deliver it.”
Meanwhile, helium suppliers are also prioritizing more critical applications of helium, specifically chip manufacturing. Helium is used to cool wafers in the semiconductor manufacturing process, and there’s no viable replacement, according to Jong-hwan Lee, a professor of semiconductor devices at South Korea’s Sangmyung University, who spoke to The Associated Press.
But keeping the supply flowing also comes with a cost.
“Usually, the supply deficit for those applications is not that great, if at all,” Kornbluth said. “But they all pay for it in terms of pricing surcharges or price increases. So, there’s a price for continuity of supply.”
Where does helium come from?
Most people recognize helium as the second element on the periodic table that we all had to learn about in grade school and something that makes our voices sound funny.
But when it comes to getting helium in the real world, it’s a complicated process.
“At least 90% of the world’s helium, 90% plus, is a byproduct of either natural gas processing or LNG production,” Kornbluth said. “The helium is produced in the ground by the radioactive decay of uranium.”
He said much of it is trapped in natural gas reservoirs.
“Helium is a waste product because it doesn’t burn, it’s inert,” Kornbluth said. “And then the waste stream that is usually mostly nitrogen and helium can be purified and then liquefied and shipped to market.”
But that shipping is complicated.
Once it’s liquified, it’s stored in special containers but after about a month, the containers can start warming up. If that happens, the gas can escape, and the helium is lost.
“To the extent that the big helium suppliers are unable to obtain the required supply from their normal sources, they could be out looking for spot loads that cost more or having to incur additional transportation cost to go to a different source than their normal source, or move containers around,” Kornbluth said. “So, yeah, it’s a big concern.”
Ella Rae Greene, Editor In Chief
