Notice from Airgas of extraordinary cost increase charge for helium

This is an update notice about events impacting the helium industry and causing supply constraints.

This information was sent as email to UW–Madison stakeholders. Other UW System schools will see similar supply and price impacts.

September 28, 2022

As you are aware, helium has been a volatile commodity this past year. We want to provide an update on events impacting the helium industry and causing supply constraints.

  • The Bureau of Land Management (BLM) Cliffside Federal Helium System faced an unplanned shutdown a few months ago and has only recently begun to operate again. BLM helium production, the primary low-cost supply source, while being maximized, is still under past production levels. In addition, BLM’s federal helium reserves are in the process of being sold. The global impact of the potential sale is currently unknown.
  • A new plant in Russia—Gazprom–had an unplanned shutdown as well and is still not operating and producing product. In addition, due to the Russian/Ukraine war, it is assumed it will be a long time before Gazprom becomes a viable source of helium again.
  • The impact of issues with these two plants is causing the rest of the industry to increase overall global blending costs. We anticipate potential price increases related to the potential sale of BLM’s reserves.
  • Airgas has been forced to source short-term contracts to augment the supply of helium and ensure they can fulfill our helium needs. These short-term contracts are unstable and consistently more expensive than the traditional longer-term agreements.
  • Raw material costs are 2-4 times higher than past contract price levels.

The logistics to move helium from these new sources (ocean freight, rail, and OTR) are all subject to the unstable and higher prices we are seeing for all commodities. Ports are experiencing delays getting product into the US.

Previously, the only practically available industry metric for helium index pricing has been the pricing provided by the BLM for the helium they provide. The impending sale of the BLM infrastructure to produce helium and the rights to the helium has ended this pricing index metric. The Algerian, Qatar, and Exxon pricing was directly based on this metric. With the absence of this stabilizing base metric, the pricing for helium in the marketplace has lost its structure. The resulting open market price structure, based on access to helium molecules, is inconsistent and rapidly escalating.

At the end of May, Airgas corporate office notified their distributors of an additional fee in the amount of $12/CCF, which equates to a 20% increase in the overall cost of helium effective June 26, 2022. In partnership with our local Airgas distributor, we delayed this special charge until recently.

It is expected we will experience another double-digit price increase for helium in early January 2023.

Thank you for your patience and understanding regarding helium supply and pricing.