2018-China Tungsten Industry Market Trend Analysis

Despite the unfavorable factors of many domestic and international environments and the continuous development of national environmental protection policies, in the first half of 2018, China's tungsten industry continued its steady and good trend since last year. The production of tungsten concentrate continued to remain stable, and the output of smelting and processing products continued. Steady growth, market demand continued to recover, export tungsten products maintained growth, prices continued to stabilize, and entered a stable operation period, fluctuations narrowed, and corporate profits continued to improve.

According to the statistics of China Tungsten Association, 123 tungsten enterprises achieved operating income growth of 26.01% in the first half of the year; profits and taxes increased by 39.02% year-on-year; profits increased by 55.94% year-on-year; and exports of tungsten products reached 17,370 tons (tungsten metal), up 14.94% year-on-year. Exports earned US$838 million, a year-on-year increase of 64.39%.

1. the economic performance

1. 1   The output of tungsten concentrate is stable, and the output of tungsten smelting and processing products is generally increasing.

Tungsten Market prices have remained relatively high price run, tungsten mining enterprises to improve economic efficiency, the tungsten mining enterprises production has increased; the tungsten mining enterprises decreased by technical innovation, safety and environmental protection and resource quality improvement, rising costs and other factors, production has decline; mineral processing trade enterprises production continued to shrink. The national tungsten concentrate production remained stable overall.

According to the statistics of the China Tungsten Association, 41 major tungsten mining enterprises produced 34,794 tons of tungsten concentrate in the first half of the year (by 365%), a year-on-year increase of 7.96%. Of which 28

The output of domestic enterprises increased, with an increase of 4,896 tons. The output of 13 enterprises decreased, and the output was reduced by 2,330 tons. The increase or decrease was offset by a net increase of 2,566 tons.

Among them, Hunan's output increased by 37.85% year-on-year. Due to the suspension of production of major tungsten mines last year, the base was low during the same period, resulting in a large increase; Henan's output decreased by 9.71% due to the reduction of resource grade; Guangdong's output decreased by 10.74% due to safety and environmental protection; Guangxi The output of Yunnan and Yunnan increased by a large margin; the output of Gansu and Fujian decreased; the output of Jiangxi was basically flat.

The demand for tungsten market maintained a growth trend, and exports maintained a high level in recent years. The output of tungsten smelting and processing products generally increased.

According to the statistics of China Tungsten Association, the output of APT, tungsten powder, tungsten carbide, cemented carbide, tungsten rod, tungsten, tungsten iron, tungsten electrode and tungsten-rhenium in the first half of the year increased by 15.03%, 6.90% and 12.68%, respectively. 16.42%, 4.16%, 33.28%, 45.40%, 0.53% and 89.74%. The output growth of high-end cemented carbide products maintained a strong momentum. The tungsten carbide output of tungsten carbide products in the first half of the year increased by 34.81%. Tungsten oxide, ammonium metatungstate (containing tungstic acid), crude tungsten wire and high specific gravity alloy decreased by 2.54%, 28.64%, 15.82% and 4.77%, respectively.

1. 2   The amount of tungsten exports continued to grow, and the amount of imported tungsten products remained stable.

Demand for tungsten abroad continues to recover, especially in the tungsten market in Europe and Asia. The export volume of tungsten in the first half of the year continued to grow.

According to the statistics of China Tungsten Association, 50 major tungsten enterprises exported 17370 tons (including metallurgical materials), which increased by 14.94% year-on-year, and exported 838 million US dollars, up 64.39% year-on-year. Among them, 3,995 tons of solid carbides were exported (physical quantity), up 20.84% year-on-year, and exports were 244 million US dollars, up 39.58% year-on-year. In addition to tungstic acid, tungsten carbide and mixed materials, the export volume of tungsten smelting and processing products in the first half of the year has increased significantly.

According to customs statistics, 1,535 tons of tungsten concentrate were imported in the first quarter, a year-on-year increase of 178.02%. The import value was US$30.697 million, a year-on-year increase of 104.41%. It is estimated that 3,000 tons of tungsten concentrate will be imported in the first half of the year, and the import value will be 60 million US dollars. The imported tungsten products will remain stable.

1.3 The price of tungsten products runs smoothly

1.3.1 Domestic tungsten market price

The supply of tungsten in the market has been steadily tightening, demand has maintained steady growth, supply and demand balance has continued to improve, safety and environmental protection supervision has been strengthened, and rising costs have effectively supported the stable operation of the tungsten market.

According to the statistics of China Tungsten Association, the domestic tungsten concentrate price in the first half of the year was in the range of 10.8 to 11.5 million yuan/ton. It was in the middle of the price level in the past 10 years, with a fluctuation range of 6.5%. It continued to maintain a stable and relatively stable range.

In the first quarter, the average price of domestic tungsten concentrate was 111,500 yuan/ton, up 52.04% year-on-year and 5.05% month-on-month. The average price of domestic tungsten concentrate in the second quarter was 110,700 yuan/ton, up 35.52% year-on-year and 0.70% month-on-month; The average price of domestic tungsten concentrate was 111,100 yuan / ton, up 43.33% year-on-year.

Tungsten smelting enterprises were underemployed due to environmental protection. In the second quarter, APT spot shortages, prices rose, while tungsten concentrate consumption decreased, and prices fell.

According to the statistics of China Tungsten Association, the domestic APT price in the first half of the year was in the range of 16.80-18,000 yuan/ton, with a fluctuation range of 7.10%, which was generally stable. In the first quarter, the average domestic APT price was 172,600 yuan/ton, up 52.47% year-on-year and 5.00% month-on-month. The average domestic APT price in the second quarter was 175,400 yuan/ton, up 40.27% year-on-year and 1.60% month-on-month; the average price of domestic APT in the first half of the year 17.4 million yuan / ton, up 46.07%.

1.3.2 International tungsten market price

The fluctuation of the domestic tungsten market price has spurred the gradual recovery of the foreign tungsten market price, which is slightly higher than the domestic market price, and the APT price remains above 300 US dollars/ton.

According to the London Metal Herald, the European APT offer in the first half of the year was in the range of 307-354 USD/ton, with a fluctuation range of 15.31%. The average price in the first quarter was 321.80 US dollars / ton, up 5.86% year on year, up 12.16% from the previous month; the average price in the second quarter was 338.82 US dollars / ton, up 56.07% year on year, up 5.29% from the previous month; the average price in the first half was 330.31 US dollars / ton, It rose by 57.33% year-on-year. The price increase of international tungsten raw materials is larger than that of domestic ones, mainly due to the tight supply of APT in China.

1.4 Business benefits continue to improve

In the first half of the year, the tungsten industry continued its steady and positive trend since last year, with enhanced profitability, a decline in losses, and continued improvement in corporate profits. However, the production and operation of enterprises still face many difficulties and challenges: First, with the deepening of the reform of “distribution management”, the transformation of government functions and the reform of the administrative examination and approval system, the promotion of market access, environmental protection tax and resource tax. The implementation, as well as the red line of ecological protection, the safety production and the strengthening of environmental protection supervision, the laws and regulations facing the development of China's tungsten industry have strengthened the protection of tungsten resources and rational development and utilization, and increased the pressure on safety and environmental protection. Second, the alkali boiled slag, molybdenum residue and wastewater treatment sludge generated by alkali decomposition in the tungsten smelting process are classified as hazardous waste, and the Ministry of Ecology and Environment initiates “Waste Removal Action 2018”, tungsten smelting pollution prevention and tungsten slag in tungsten smelting enterprises. Reduced, resourced and harmless use of disposal is facing unprecedented pressure. Third, the overall innovation capability is not strong, the coordinated development of the industrial chain is unbalanced, the industrial concentration is low, the overall competitiveness of the industry is not strong, the industrial structural contradiction is still outstanding, and the quality and efficiency of the industry development are not high.

According to the statistics of China Tungsten Association, 123 major tungsten enterprises in the statistics of the first half of the year achieved a year-on-year increase of 26.01% in operating income; the main business income increased by 26.72%; the profit and tax increased by 39.02%; the total profit increased by 55.94%. The profit rate of the main business of 123 tungsten enterprises was 5.98%, which was lower than the profit rate of the main business income of industrial enterprises above designated size.

Among the enterprises in the statistics, the loss side was 17.65%, and the loss side continued to narrow. Among them: the loss of mining enterprises is 21.21%; the loss of smelting enterprises is 20.68%; the loss of hard alloy enterprises is 11.36%. The loss of 11 tungsten enterprises was 27.27%. The enterprise's profit and loss differentiation, market competition is intensifying, and the industry's economy is stabilizing and the trend is better.

2. Market analysis and outlook

From the domestic market, in the first half of the year, the national economy continued to be generally stable, stable and stable, and structural adjustments were further advanced. New and old kinetic energy continued to be transformed, quality and efficiency improved steadily, and the economy began to develop with high quality. The GDP was good. It grew by 6.8% year-on-year and remained in the range of 6.7%-6.9% for 12 consecutive quarters. The industrial added value of industrial enterprises above designated size increased by 6.7% year-on-year, and the growth rate dropped by 0.1 percentage points from the first quarter. In terms of three major categories, the added value of the mining industry increased by 1.6% year-on-year, the manufacturing industry increased by 6.9%, and the electricity, heat, gas and water production and supply industries increased by 10.5%. The added value of high-tech industries and equipment manufacturing industry increased by 11.6% and 9.2% respectively, which was faster than the industrial enterprises above designated size by 4.9 and 2.5 percentage points respectively. In June, China's manufacturing purchasing managers' index (PMI) was 51.5%, which was above the 50% line for 23 consecutive months. The overall manufacturing industry continued to expand. With the adjustment of manufacturing structure and the continuous upgrading of products, the growth of strategic emerging industries and the continuous release of infrastructure construction demand will continue to drive demand in the tungsten market, and domestic demand in the tungsten market will maintain growth. The delineation of the ecological protection red line and the strengthening of safety and environmental protection supervision, as well as the implementation of the environmental protection tax and the implementation of the resource tax law, the development and management of tungsten ore has been continuously strengthened, the rigidity of tungsten mining has increased, and the grade of tungsten ore resources has declined. The impact of mining mining and expansion and mining rights control, domestic tungsten concentrate production continues to be generally stable, the supply of tungsten raw materials is still tight, and the contradiction between supply and demand of tungsten raw materials continues to improve.

From the perspective of foreign markets, the global economy continues to show a good recovery, but the risk factors have increased. The International Monetary Fund (IMF) released the World Economic Outlook report on July 16th, indicating that global growth rates are expected in 2018 and 2019. Reaching 3.9%, but the balance of economic expansion has declined. The US recently announced and expected tariff enhancement policies and retaliatory measures by trading partners have made it more likely that there will be escalating and sustained trade actions, which may slow the economic recovery process. The medium-term growth prospects have been suppressed. However, the demand for tungsten in Europe remains strong, and the Sino-US trade war will not have a direct impact on the tungsten market. The production of stopped production in foreign countries has not resumed production, the construction of new projects is slow, the release of new capacity is not expected, the output of foreign tungsten concentrates remains stable, the stock of raw materials is still low, and the situation of tight supply in the market has not changed fundamentally.

Overall, the current downstream demand for tungsten at home and abroad is stable, the output of tungsten concentrate is growing steadily, the contradiction between supply and demand is further alleviated, the safety and environmental protection supervision is strengthened, and the cost is rising to effectively support the stable operation of the tungsten market. The tungsten market price is expected to fluctuate in a narrow range and will continue to operate smoothly.