2017 Tungsten Market Review and 2018 Outlook

In 2017, tungsten market out of the market "haze" after nearly three years of downturn, the price gradually return to the rational, the industry situation continued steady. The performance is as follows: First, the output of tungsten concentrates remained stable, the output of smelting and processing products continued to grow, especially the growth of high-end hard alloy production was strong. Second, exports of tungsten products to maintain growth momentum, imports of tungsten products continue to decline. Third, the tungsten market price shocks rise, tungsten concentrate prices back to 100,000 yuan / ton, which is the high since April 2014. Fourth, the economic efficiency of enterprises improved significantly, reversing the situation of loss for two consecutive years. 

Tungsten market review 

The output of tungsten concentrates is stable and the output of smelting and processing products increases 

The tungsten concentrate output of the major tungsten mining enterprises within the statistics of China Tungsten Association (hereinafter referred to as "China Tungsten Association") increased by 2.93% from the same period of last year, an increase of 1.29 percentage points lower than that of the first three quarters. It is estimated that the output of tungsten concentrate in the country in 2017 will be 130,000 tons (Fold WO365% standard tonnage), an increase of about 4.5%, basically restored to 2015 tungsten concentrate production levels. Among them, the output of tungsten concentrates in Jiangxi, Hunan, Guangxi, Yunnan, Fujian and Gansu provinces increased, while that in Guangdong, Zhejiang, Inner Mongolia, Henan and Xinjiang decreased.

From the output statistics, the output of tungsten smelting products generally declined as the domestic tungsten market prices remained low in 2016, and the output of tungsten smelting products generally declined after the tungsten mines and smelters reduced or stopped production. The relatively low base in the same period led to a certain increase in the output of tungsten concentrates in 2017 . 

In view of the status quo of tungsten mining, the state continues to control the mining of tungsten ore. At the same time, due to the decline in the grade of tungsten resources, the rise in production costs, increased pressure on safety and environmental protection, and the discontinued production due to the downturn in market prices and the financial difficulties of enterprises in previous years Difficult to resume production of mines and other effects, difficult to increase the output of tungsten concentrate, the overall tends to be stable. 

In 2017, as the market demand continued to recover, the market price shocks rose and the downstream smelting and processing enterprises enjoyed both production and sales growth and maintained their growth momentum. In addition to tungsten, tungsten, tungsten electrode and tungsten iron, the output of other tungsten smelting products have increased significantly. The main tungsten smelting and processing enterprises within the China Association of Tungsten Statistics In 2017, the output of main tungsten smelting and processing products APT, tungsten oxide, tungsten powder, tungsten carbide, ammonium metatungstate, hard alloy, high specific gravity alloy and tungsten crucible increased by 30.47% 21.38%, 14.15%, 19.39%, 2.54%, 28.37%, 119.81% and 76.30% respectively. The output of tungsten rods, coarse tungsten wires, fine tungsten wires, tungsten electrodes and ferro-tungsten decreased by 13.58%, 1.83% and 17.87% , 1.58% and 0.27% respectively. 

China's tungsten industry is accelerating to high-end development. The "industrial teeth" reputation, accounting for more than half of tungsten consumption of cemented carbide production continued its strong growth. China tungsten Association statistics of major cemented carbide companies in 2017 29227 tons of cemented carbide production, an increase of 28.37%, the national carbide output is estimated 35,000 tons, an increase of about 23%, the first time exceeded 30,000 tons, a record high. Cemented carbide CNC blade production increase of more than 45%. 

Export volume of tungsten to maintain growth, imports of tungsten products continue to decline

In 2017, the demand for tungsten in the world continued to recover. Although the growth rate slowed down for the fourth consecutive month in the second half of the year, the annual export volume of tungsten products increased substantially year on year and maintained a strong growth. China Tungsten Association According to the statistics of export data, in 2017, China exported 28,984 tons of tungsten products (excluding cemented carbide and metal, the same below), an increase of 31.22% over the same period of previous year, an increase of 20.25 percentage points over 2016, The highest level, close to the historical high of 31711 tons of tungsten products exported in 2006. In June 2017, the export volume of tungsten products was 3,145 tons, the highest single-month export volume in 10 years. In 2017, the export of tungsten products amounted to 919 million U.S. dollars, up 41.21% over the same period of last year. The increase of export value is higher than the increase of export volume, and the price of export tungsten product rebounds obviously. 

China's exports of cemented carbide for many years to maintain growth. In the first three quarters of 2017, exports of cemented carbide reached 5484 tons, an increase of 14.55% over the same period of last year. It is estimated that the export of cemented carbide in 2017 is expected to reach around 7,700 tons, an increase of 12% over the same period of last year, exceeding 7,000 tons for the first time to a record high.

Despite the recovery of imports of tungsten products in the third quarter of 2017, the volume of tungsten imports in the whole country continued to decline and the decline narrowed. According to the statistics of export statistics, in 2017, China's tungsten products imports 2,908 tons of tungsten products (excluding cemented carbide and metal, the same below), a decrease of 4.93% from the same period of last year and a 5.61% decrease over the 2016 figure. Including imports of tungsten ore 2032 tons, down 3.28%, a decrease of 12.31 percentage points lower than 2016. Tungsten imports amounted to 91,130,000 U.S. dollars, an increase of 0.76% over the same period of last year. 

Tungsten market price shocks rise

After going down in price and going to inventory in the domestic tungsten market for nearly three years, the domestic tungsten market showed obvious de-stocking effect, obvious recovery of tungsten demand, tight supply of tungsten raw materials, and rising market price shocks, and gradually returned to rational. In June 2017, there was a slight turmoil. The tungsten concentrate rapidly rose in September 2017 with an average monthly price of 113,700 yuan / ton, up by 68.20% over the same period last year and up 13.93% compared with the same period of last year. The average high price is also the high monthly average since April 2014. Tungsten concentrate prices generally stabilized, rational recovery to the cost of mining near the line. According to the statistics of China Association of Tungsten, the annual average price of domestic tungsten concentrates was 90,100 yuan / ton in 2017, up 31.15% over the same period of last year, and the annual average price of APT was 138,800 yuan / ton, up by 30.30% over the same period of last year.

Tungsten market prices in China rose shocks, pulling the foreign tungsten market prices gradually picked up. China Tungsten Association According to the statistics of export data, in 2017, the annual average prices of APT, yellow tungsten, blue tungsten, tungsten powder, tungsten carbide and alloy mixture in China increased by 17.37%, 19.76%, 21.75%, 16.00% and 14.69% And 24.05%. 

The London Metal Guide (MB) APT average monthly quotation dropped from a high of 470 US $ / tonne in June 2011 for more than five consecutive years to $ 191.25 / tonne in December 2016, down $ 278.75 / tonne, A drop of 59.31%, falling time and decline beyond the financial crisis. In 2017, the market price of tungsten in China showed a rational regression trend, driving the international tungsten market prices to gradually rise. The quotation of "Metal Herald" (MB) APT in London, England, showed an overall upward trend. APT average price of 242.47 US dollars / ton, up 26.84%. 

Significant improvement in economic efficiency of enterprises 

In 2017, the market price rose, the number of loss-making enterprises decreased, the profitability of enterprises increased, and the economic benefits of the industry improved significantly. This shows a steady and favorable trend. However, the production and operation of enterprises still face many difficulties and challenges. The differentiation of profitability of tungsten enterprises has intensified and the foundation for the improvement of the economic situation of the industry needs to be further consolidated.

The main tungsten enterprises within the China Association of Tungsten Statistics achieved a year-on-year increase of 21.65% in operating revenue in 2017, an increase of 2.97% over the first half of the year. The revenue from principal operations increased by 21.62% from the same period of previous year, an acceleration of 4.10% over the first half of the year. 175.30%, an acceleration of 57.46 percentage points from the first half of the previous year; a profit-to-loss deficit-deficit increase of 2.96 billion yuan year-on-year, reversing the loss situation for two consecutive years. However, the overall profitability of the industry is not strong, and the industry average profit margin of 4.21% of main business, well below the national average of industrial enterprises. In particular, due to the overall price of tungsten concentrates has not yet recovered to a reasonable level of mining costs, some tungsten mines continue to suffer losses, accounting for 42.42% of the losses in the tungsten mines, 9.1% more than the loss in the first three quarters of 2017 Percentage points, year-on-year loss reduction of 45.82 percentage points. Tungsten smelting, carbide business and tungsten processing profitability increased, smaller loss.

Tungsten market outlook 

The year 2018 marked the 40th anniversary of the implementation of the spirit of the 19rst National Congress of the CPC and the 40th anniversary of the reform and opening up. It is a key year for deciding to build a well-off society in an all-round way and implementing the "13th Five-Year Plan". The Central Economic Work Conference conducted a profound analysis and judgment on the current situation at home and abroad, and clarified the general requirements, development goals and major measures for economic work in 2018. China Tungsten Association will always perform its service purposes, unify its thinking and actions with the central authorities in judging and making decisions on the situation, persist in problem orientation, actively offer advice and suggestions, take advantage of policy opportunities, focus on the high-quality development of the tungsten industry, do a good job in the service industry, and promote Tungsten industry with high quality and healthy development.

After nearly 10 years of development, the tungsten industry in our country has experienced rapid development in the downstream industries and accelerated the high-end development of the industry. Industry concentration and rising influence in the world have entered the advanced ranks of the tungsten industry in the world, . China's tungsten industry policy, market supply and price movements have become the key dominating factors affecting the global tungsten market. Tungsten mining costs rise rigidly, the red line of ecological protection and the strengthening of safety and environmental protection supervision and the introduction of environmental protection tax and the implementation of the resource tax law will play a very good supporting role in the market price. At present, the domestic tungsten market increased positive factors, the market pick up signal increased, the steady supply of tungsten raw materials, supply and demand in the tungsten market will continue to improve the conflict, the tungsten market experienced price depth adjustment tempered, industry self-regulation to enhance confidence in the market, tungsten market price stability Enhanced. Expected tungsten market prices in the future into a stable period of operation, fluctuations narrowed, steady rise, tends to operate within a reasonable range, and driven by the domestic market price of tungsten, the international market prices will continue to stabilize the situation. In the long run, based on the dominance and influence of tungsten resources in the world, it is inevitable that the market price of tungsten should gradually and rationally rise.

Tungsten Market Analysis

The global economy showed a recovery trend. The three international agencies including the International Monetary Fund, World Bank and the United Nations Economic Cooperation Organization generally raised their forecasts for world economic growth. They believed that 75% of the economies in the country and the rest of the world experienced a resumption of growth and the global economic growth is expected to be 2017 Reaching 3.7% and will reach 3.9% in 2018. In 2017, the economic growth rate of emerging economies and developing countries will reach 4.7%, up from 4.9% in 2018. With the continuous advancement of the "Belt and Road Initiative", the reindustrialization and manufacturing upgrading in advanced economies, the acceleration of industrialization and urbanization in emerging economies, the interconnection and interoperability of infrastructure across the world and the demand for international tungsten to enter a new round of Smooth growth period.

 China's economy continued its steady growth with a steady economic growth rate of 6.9% in 2017, better than expected. The supply-side structural reform focused on "three reductions, one reduction and one supplement" continued to be promoted. The "Made in China 2025" Demonstration Zone Construction, New Material Industry "Zhezi Project", intelligent manufacturing engineering, national science and technology major projects such as the steady progress for the high-end tungsten industry development provides a broad market space, the domestic tungsten market demand continues to recover, the tungsten industry situation will continue to be consolidated And development.

From the perspective of foreign supply, the output of tungsten concentrates remained generally stable. Due to the continuous downturn in the tungsten market for many years, the number of tungsten mines that are stopped down, cut down and stopped in the world is still high, resulting in a drop in global tungsten concentrate output. At current prices, some foreign tungsten mines are still struggling to start. The supply in foreign markets will remain stable in the future, and the contradiction between supply and demand in the tungsten market will continue to improve. Russia is rich in tungsten resources, is the world's second largest tungsten resource country, accounting for about 14% of global tungsten resources. Affected by many factors, the output of tungsten concentrate in Russia dropped from 20,000 tons (WO3) in 1990 to 3,300 tons (WO3) in 2016, and the output tends to be stable. Due to environmental, traffic and cost problems, the Canadian tungsten mine Production was discontinued in December 2015 and MactungMine is not yet available. Tungsten mines in Spain, Portugal, Bolivia, Austria and South Korea are not producing enough due to the ongoing or discontinued production of the mines currently in operation And remains stable. At present, the production of tungsten ore from the United Kingdom's Hermerdon mine will only achieve half its current production capacity due to its beneficiation process, cost, and capital after it is put into operation in 2015. The output of NiuPhong tungsten ore in the country remained stable with no Production plans; tungsten concentrate production in Rwanda, Australia and Brazil is low or has been discontinued. The strategic reserve of tungsten in the United States and Russia is at a record low, and the supply of tungsten in Russia itself can not meet its normal domestic demand. At the same time, due to the depreciation of the ruble, the labor cost is relatively low, and the tungsten products have a price competitive advantage. However, due to the small output, the impact on the market is limited.

From the perspective of foreign demand, tungsten demand will continue to maintain growth. The U.S. economy will continue to recover. The recovery of manufacturing will boost the growth of tungsten demand and the demand of the tungsten market will continue to recover. However, we should clearly understand that there are some uncertainties in the U.S. tungsten market. Factors such as geopolitical tensions, tax reform, rising labor costs, declining corporate efficiency and the continuing decline in U.S. exports can have negative repercussions on the international tungsten market. The euro zone economy is optimistic about the situation, coupled with cobalt and nickel prices led to the rebound in the price of cemented carbide. The economies of 19 countries in the Eurozone all maintained their growth, investor confidence in the economy reached their highest level in 10 years and the unemployment rate dropped to its lowest level in 8 years. Not only the traditional engine of economic growth, Germany and the Netherlands, have seen notable growth. Countries such as Spain, France and Portugal that suffered heavy losses during the financial crisis have also shown a clear recovery. Emerging market countries have maintained a positive trend. Vehicles, mining and transportation related to tungsten consumption Industry to maintain growth, will continue to stimulate tungsten consumer demand. Russia's tungsten consumption keeps growing. Demand in Japan is steadily rising and inventories are low. As the Tokyo Olympics in Japan approaches 2020, public investment will continue to grow, which will stimulate growth in tungsten consumption demand. According to the China Association of Tungsten and Metallurgy, the volume of tungsten products (excluding cemented carbide) exported to the United States, Japan, South Korea and Europe in 2017 increased by 75.12%, 30.79%, 18.06% and 28.45% respectively over the same period of previous year, maintaining the growth trend.

Judging from the domestic supply, the government will continue to control the issuance of this "master switch" of tungsten ore mining permit, and the output of tungsten concentrate production will remain stable. Affected by tungsten resource endowments, mining and dressing costs, market prices, as well as capital, safety and environmental protection, the output of tungsten concentrates is generally stable with no major increase and the market supply will continue to be stable in the future.

 First, the macro-control of tungsten resources and supervision and management continue to strengthen. Over the past 10 years, the state has imposed total control on tungsten mining and has stopped applying for a new tungsten mining permit, effectively curtailing tungsten ore mining and dressing capacity. As the government continues to strengthen macro-control, digital mine, green mine