China 2019 Tungsten Market Analysis and Outlook

In 2019, the steady supply of tungsten in the market will continue. The price of tungsten concentrate is affected by the decline of resource grade, rising cost, increased safety and environmental protection pressure, and the space for decline is small; market uncertainties are still more, downstream demand growth is slowing, market demand pressure is still large; APT, powder The price of tungsten intermediate products and end products such as hard alloys and tungsten materials is under pressure, and the possibility of a large increase is unlikely. The tungsten market price is expected to continue to operate in a relatively reasonable range.

From the supply side, the first is the steady supply of domestic tungsten raw materials. Affected by factors such as policy control, resource endowment, mining cost, safety and environmental protection, etc., the output of the main mining tungsten mine and the comprehensive utilization of production will decline, and the processing output of mineral products will shrink, which will offset the production of the main mining tungsten mine due to technological transformation in individual areas. Increase; secondary resource recycling and utilization grow steadily, but the impact on market supply is limited. Second, the output of foreign tungsten concentrates remained stable. In the current global economy and tungsten market price situation, foreign production mines are still difficult to recover (for example, the Canadian Cantung Mine tungsten mine is costly and has been discontinued since December 2015. The UK Hermerdon tungsten mine can only be realized after it was put into operation in September 2015. Half of the production capacity has been discontinued in October 2018. The new project has been slow to advance (for example, the Canadian Mactung Mine tungsten mine has not yet been developed. Almenty has 5 tungsten mines under construction and discontinued. Currently only 3 mines are in production; South Korea's Shangdong tungsten mine is still under construction), Vietnam's Niu Phao tungsten concentrate production remained stable; Bolivia and Austria's tungsten concentrate production was small, stable; Mongolian tungsten concentrate production decreased significantly; North Korea tungsten concentrate production increased significantly; Production of tungsten concentrates such as Rwanda, Australia and Brazil is low. Third, foreign reserves and inventories are still at historically low levels. The US tungsten strategic reserve has declined, and Russia's reserves are very low. Due to market uncertainties such as Sino-US trade friction, foreign tungsten companies cautiously purchase and control inventory.

From the demand side, in 2019, tungsten market demand will continue to maintain a low growth rate. First, China's economy is generally stable, quality and efficiency are steadily increasing, and the manufacturing purchasing managers' index continues to remain in the boom zone. In particular, high-tech manufacturing and equipment manufacturing, infrastructure construction and private investment continue to grow, and will continue to drive demand in the tungsten market. Second, with the turning of Sino-US trade friction, the confidence of the international tungsten market has recovered. Although the demand for foreign tungsten market has weakened, it is expected to continue to maintain a steady state. In 2018, the total US GDP is expected to exceed 20 trillion US dollars for the first time, the fastest growth in the past four years, the unemployment rate hit a new low in 2000, the consumer confidence index reached the highest level in 2000, the number of drilling rigs and manufacturing orders increased. In the fiscal year 2017/2018, the US Kenner achieved sales revenue of 2.368 billion US dollars, a year-on-year increase of 15.04%, and a net profit of 200 million US dollars, an increase of 307.38%. Although the economy of the 28 EU countries has slowed down, the overall operation is stable, and consumer and market confidence is still at a high level. It is expected that GDP growth will remain at around 2.1% in 2018. Sandvik's 12-month consecutive 12-month order, revenue, and adjusted operating profit and cash flow all reached record highs, with annual orders increasing by 9.0% year-on-year. Among them, orders for mining and rock drilling technology and materials technology sectors grew by double digits, and growth in most regions was strong. Although the growth of machining solutions sector slowed down, there was also a one-digit growth, mainly due to reductions in Asian orders and automobiles. The impact of industrial slowdown. The annual operating income was SEK 10.072 billion, up 11.0% year-on-year, and operating profit (after adjustment) was SEK 18.625 billion, up 27.0% year-on-year. Japanese cemented carbide production continued to grow and demand grew steadily.

But we must also see that the tungsten market still faces many challenges and risks. First, new changes in the world economy, new variables, increased uncertainties, insufficient growth momentum, and volatile commodity prices, some international institutions have lowered their world economic growth expectations for the next two years. Despite the turning point in Sino-US trade friction, the indirect impact on the tungsten industry cannot be underestimated. Second, the business risk is worthy of attention. First, the implementation of policies such as negative market access list, environmental protection tax and resource tax, as well as the delineation of ecological protection red lines, the strengthening of safety production and environmental protection supervision, especially the prevention and control of tungsten smelting pollution and the reduction and recycling of tungsten slag. And the use of harmless disposal and other exposures are unprecedented. Secondly, it is worth noting that the mining capacity change registration has been cancelled, and the expansion of mines, especially the expansion of small mines of less than 30,000 tons, is worthy of attention. Third, the access to the tungsten mining market will be facilitated by the replacement of old mine resources, promote the scale and intensive exploitation of tungsten resources, and protect the ecological environment, but will also control the total amount of tungsten mining. Bring some pressure. Fourth, market competition has intensified. China's tungsten industry is in a critical period of industrial transformation and high-quality development. It faces serious challenges while facing development opportunities. The concentration of tungsten industry is still not high, the production capacity of medium and low-end products is still excessive, and the structural contradictions of industrial structure are still outstanding. The homogenization competition of middle and low-end products will further intensify, and the profitability of enterprises will be further differentiated.