Party City’s bankruptcy partly due to the high cost of helium

Retail chain Party City has filed for Chapter 11 bankruptcy. The last few years have been tough for the event business, and the pandemic has made parties a rare occasion. But another big reason Party City has struggled is the high cost of helium.

While global supply chains for many products have generally smoothed out, we’re still in what experts call the Helium 4.0 shortage. Party City isn’t the only retailer affected.

When Kate Luneva launched Wow Balloons in the Dallas-Fort Worth area in 2019, helium wasn’t cheap. But she was able to get full tanks from her supplier – until six months ago.

“They started selling half tanks instead of full tanks,” Luneva said, “because they couldn’t get enough helium for everyone.”

Before the pandemic, a full tank of helium cost Lunev $195. Now it’s $350. Fortunately, Lune’s company mostly uses regular air to fill their balloons, although helium is still available to customers. Air doesn’t lift balloons that high, but it kept her job.

“There are definitely a lot of companies where helium arrangements are 100% of their revenue,” Luneva said.

While helium balloons aren’t 100% of Party City’s revenue, they are a big driver of traffic, said Jefferies analyst Karru Martinson.

“People come in for a balloon, and they’ll, at the same time, say, ‘Oh, I need party favors.’ You know, we should buy a piñata too,’ Martinson said.

Party City started scrambling for helium last year. “U.S. Bureau of Land Management Plant, [which] supplies about 8% of global helium, it fell at the beginning of the year,” added Martinson.

That decline was caused by concerns about worker safety; fires and explosions have shut down other plants around the world.

Commercial helium is usually a byproduct of natural gas refining. But because it’s used for everything from cooling MRI machines to making semiconductors, a helium mining industry is emerging in North America.

“The price of helium has risen to the point where it can be economically viable to explore for that gas and drill for that gas, just for helium,” said Phil Kornbluth, a longtime industry consultant.

Helium prices have almost doubled since 2021, he said. Kornbluth expects the shortage to decrease – but not until 2024.

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