The China's Tungsten Industry Situation and Market Outlook in the First Three Quarters of 2018

Tungsten industry situation

In the first three quarters of this year, China's tungsten industry generally maintained a stable operation. The output continued to grow steadily, the export remained high, the price fluctuated slightly, and the economic benefits of the company continued to improve. The economic benefits of downstream smelting and processing enterprises in the tungsten industry continued to grow. In the third quarter, the operating pressure of enterprises in the tungsten industry increased, and the growth rate of economic benefits declined.

Steady growth in output

In recent years, China's tungsten resource grades have declined, mining costs have risen, small-scale tungsten mines are still difficult to resume mining, production of mineral processing enterprises continues to shrink, and new tungsten mining licenses are still under control, and resource and environmental constraints are strengthened. The trend of steady and declining concentrate production shows. According to the statistics of China Tungsten Industry Association (hereinafter referred to as “China Tungsten Association”), in the first three quarters of 2018, the output of tungsten concentrates of 41 major tungsten mining enterprises was 54,545 tons (US 365%), an increase of 2,844 tons, an increase of 3.85%. Among them, the output of 23 enterprises increased by 5,489 tons, and the output of 18 enterprises decreased, with a reduction of 2,645 tons.

At present, market inventories are still at a low level, market demand continues to grow, and the output of downstream smelting and processing products generally shows a growth trend. The innovation speed of cemented carbide tools is accelerating, new grades, new coatings and new structures are emerging, and the output and export volume of cemented carbides are growing. Especially the high-end carbide CNC blades are growing strongly, and the industrial structure is moving towards the mid-to-high end. Industrial transformation and upgrading have accelerated. According to the statistics of China Tungsten Association, in the first three quarters, the output of major tungsten smelting and processing enterprises APT, tungsten oxide, tungsten powder and tungsten carbide increased by 3.30%, 2.00%, 4.20% and 9.72% respectively; cemented carbide production increased by 13.99% year-on-year. The output of high-grade cemented carbide CNC inserts increased by 32.56% year-on-year; the output of forged tungsten strips (rods) and tungsten tantalum increased by 16.21% and 40.96% respectively; ammonium metatungstate (containing tungstic acid) and unwrought tungsten strips (rods) ), crude tungsten wire, high specific gravity alloy, tungsten electrode and ferro-tungsten production decreased by 26.68%, 4.97%, 17.84%, 8.96%, 15.66 and 2.46%, respectively.

The growth rate of export tungsten products slowed down and remained high

According to the statistics of China Tungsten Association, in 2017, China exported 35,401 tons of tungsten products (including hard alloys and metal parts), a year-on-year increase of 27.29%, a record high since 2008. Among them, exports of cemented carbides of 6,417 tons (amount of metal), an increase of 11.78%, a record high, 5.8 times in 2000, exports of 380 million US dollars, an increase of 12.43%.

Affected by market expectations such as Sino-US trade friction and increased global economic growth pressure, the growth rate of China's export tungsten products slowed down significantly in the third quarter of 2018, but remained at a relatively high level. According to the statistics of China Tungsten Association, the cumulative export of tungsten products in the first three quarters was 29,145 tons (including hard alloys and metal-dosing), an increase of 1.07% over the same period of last year. The growth rate was 13.87 percentage points lower than that of the first half of the year; in the first three quarters, China’s cumulative export volume was 1.385 billion. The US dollar increased by 39.70% year-on-year. The growth rate was 24.69 percentage points lower than that of the first half of the year. Among them, 5462 tons of hard alloys were exported (amount of metal), up by 17.55% year-on-year. The growth rate was 3.29 percentage points lower than that of the first half of the year; the export volume was 406 million US dollars. The growth rate was 28.95%, and the growth rate was 10.56 percentage points lower than that in the first half of the year.

The price fluctuated slightly and the overall price stabilized

In 2003, domestic tungsten concentrate prices began to rise, from 18,000 yuan / ton in 2000 to 24,500 yuan / ton, followed by shocks and rebounds, the average monthly price in May 2005 soared to 132,000 yuan / ton, 2006 The average annual price has exceeded 100,000 yuan/ton, and the average annual price in 2011 has reached a historical high of 137,600 yuan/ton. After several shocks, the current rational return to a relatively reasonable operating range of 100,000 yuan / ton (see Figure 1).

In the first three quarters of 2018, the market supply and demand was stable. Due to the slowdown in the demand of the international tungsten market, the tungsten market price fell in July, but the upstream and downstream tungsten market prices generally stabilized.

In the first quarter, the average price of domestic tungsten concentrate was 111,500 yuan/ton, up 5.05% from the previous month and up 52.04% year-on-year. The average price of domestic tungsten concentrate in the first half was 111.10 million yuan/ton, up 8.28% from the previous month and up 43.33% from the same period last year. In the quarter, the average domestic price of tungsten concentrate was 102,800 yuan/ton, down 7.68% from the previous month and up 3.73% year-on-year. In the first three quarters, the average price of domestic tungsten concentrate was 108,300 yuan/ton, up 27.86% year-on-year (see Figures 2 and 3). ).

In the first quarter, the average price of domestic APT was 172,600 yuan/ton, up 5.00% from the previous month and up 52.47% from the same period of last year. The average price of domestic APT in the first half of the year was 174,400 yuan/ton, up 9.78% from the previous month and up 46.07% from the same period of last year. In the third quarter, domestic APT The average price was 165,300 yuan / ton, down 5.76% from the previous month and up 8.25% year-on-year. In the first three quarters, the average domestic APT price was 171,100 yuan / ton, up 31.31% year-on-year. APT prices rose more than the price increase of tungsten concentrates due to the suspension of APT companies (see Figure 4).

In the first three quarters, the European APT offer for the London Metal Herald (MB) fluctuated between $275 and $354/ton, and Zui had a large fluctuation of 28.73%. It fell below $300/ton on August 25 and stabilized at $275-$290/ton in September and $275-$295/ton on October 19. In the first quarter, the average price of APT in Europe was US$321.80/ton, up 12.16% from the previous month and up 58.67% from the same period of last year. The average price of APT in Europe in the first half was 330.31 USD/ton, up 20.12% from the previous month and up 57.33% from the same period of last year. The average price was 307.50 USD/ton, down 9.24% from the previous month and up 16.90% from the same period of last year. In the first three quarters, the average price of APT in Europe was 322.71 USD/ton, up 41.76% year-on-year (see Figure 5).

Economic efficiency growth slowed down

China's tungsten industry process technology and equipment level, product quality and grades, as well as the world's influence, have entered the world's tungsten industry development first, is in a critical period of high-end development. The investment in smelting and processing projects is oriented towards advanced technology, green environmental protection and high-end tungsten products. The project has a high starting point, large investment, and standardized management, especially for high-end cemented carbide rods, CNC blades and tools. The overall quality and efficiency of the industry has gradually improved.

In the first three quarters of 2018, the tungsten industry maintained a stable operation overall, with steady growth in output, high export prices, small fluctuations in prices, and continued improvement in economic efficiency. In the third quarter, affected by the Sino-US trade war and the downward pressure on the global economy, the overall economic efficiency of enterprises has declined.

According to the statistics of China Tungsten Association, in the first three quarters, 122 major domestic tungsten enterprises achieved operating income growth of 20.28% year-on-year, a slowdown of 5.73 percentage points over the first half of the year; profits and taxes increased by 36.96% year-on-year, a decrease of 2.06 percentage points over the first half of the year; The total amount increased by 41.67% year-on-year, and the growth rate was 14.27 percentage points lower than that of the first half of the year. The profit growth of tungsten mining enterprises has been greatly slowed down compared with the first half of the year, and the economic benefits of downstream smelting and processing enterprises continue to grow. Among them, the profit of tungsten smelting enterprises increased by 14.40% year-on-year, the growth rate was 20.91 percentage points higher than that of the first half of the year, and the growth rate was negative. The profit of cemented carbide enterprises increased by 18.12% year-on-year, and the growth rate was 2.64 percentage points higher than that of the first half.

Excluding two incomparable data, in the first three quarters, among 120 companies, 100 were profitable (66 gains, 17 profit reductions, 17 losses turned into profit), 20 losses, and 16.67% of losses. In the half year, it was reduced by 0.98 percentage points.

Market outlook

From the domestic market, the supply of tungsten raw materials has stabilized, demand has continued to grow, and the trend of tight supply has not changed. With the delineation of the ecological protection red line and the strengthening of tungsten mine development and management, the implementation of tungsten smelting pollution prevention, environmental protection tax and resource tax law, the cost of tungsten mining is increasing rigidly, and the grade of tungsten ore resources is decreasing. The impact of mining and mining expansion and mining rights control, resource and environmental constraints continue to increase, the trend of domestic tungsten concentrate production steady decline is more obvious. China's economy is generally stable, structural adjustments have been further advanced, new and old kinetic energy have been continuously transformed, quality and efficiency have been steadily improved, manufacturing purchasing managers' index has continued to remain in the expansion range, high-tech industries and equipment manufacturing industries continue to grow, with manufacturing restructuring and products. The continuous advancement of upgrading, the growth of strategic emerging industries, and the investment in infrastructure construction will continue to drive demand in the tungsten market. Domestic tungsten market demand will continue to grow, but the growth rate will slow down.

From the perspective of foreign markets, foreign production mines have not resumed production, new projects have been slow to advance, tungsten concentrate production has remained stable overall, foreign reserves and stocks have remained low, and market supply has not changed. The United States imposes tariffs on tungsten products downstream of China's export of cemented carbide mixes. The direct impact on China's exports of tungsten products to the US market is limited, but its indirect impact should not be underestimated. Affected by Sino-US trade friction, the uncertainties in the international tungsten market will increase and the risks will increase. The domestic tungsten market demand and downstream tungsten deep processing products will be affected.

China's tungsten industry policy and supply and demand in the tungsten market are still the key factors affecting the global tungsten market. Overall, the production of tungsten concentrates abroad is stable. Domestic tungsten mining is subject to policy control, resource endowment, mining cost, and safety and environmental protection. It will effectively support the supply and demand of tungsten market and the stability of prices. In the future, the tungsten market price will generally stabilize. Slightly oscillating operation.

Challenge

China's tungsten industry is in a critical period of high quality development. As the overall price of tungsten concentrate has not recovered and stabilized to a reasonable level of mining costs, some tungsten mining enterprises are still losing money, the profitability of tungsten enterprises is intensifying, and the economic situation of the industry needs to be further consolidated. There are still many uncertainties in the current market, and enterprises still face many difficulties and challenges in their production and operation.

The first is that the business environment facing enterprises is still complicated. On the one hand, 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 implementation of policies such as negative market access list, environmental protection tax and resource tax, and the ecological protection red line. The laws and regulations on demarcation, safe production and environmental protection have strengthened the protection of tungsten resources and rational development and utilization, and the pressure on safety and environmental protection has increased. On the other hand, international environmental uncertainty factors have increased, global economic growth is under pressure, and pressure on tungsten exports is increasing.

Secondly, the resource crisis tungsten mine resource replacement is imminent, and the tungsten mine mining process technology equipment research and development and renovation and transformation of too much debt, mining and selection, mechanization, intelligent, low level of digital, high cost and low efficiency.

The third is that alkali-cooked slag, molybdenum-containing slag and wastewater treatment sludge generated by alkali decomposition in tungsten smelting process are classified as hazardous waste, and tungsten smelting pollution prevention and reduction, resource utilization and harmless utilization of tungsten slag are unprecedented. pressure.

The fourth is that the overall innovation ability of the industry 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.

policy suggestion

We will implement the spirit of the 19th National Congress of the Communist Party of China, adhere to the development policy of “saving resources, protecting the environment, and transforming and upgrading”, adhere to the development concept of “innovation, coordination, green, openness, and sharing” and adhere to the principle of “innovation-driven, quality-first, green development, and The basic principle of “integration and open cooperation” is “Made in China 2025” as the action plan, with the core of improving development quality and efficiency, focusing on supply-side structural reform and expanding market demand, in order to promote resource integration and control mining. Focus on strengthening technological transformation, eliminating backward production capacity, and breaking through development bottlenecks, promoting quality change, efficiency change and power change, comprehensively improving innovation capability, economic strength and international competitiveness, and achieving high-quality development of tungsten industry.

First, we must focus on the integration of equipment intelligence, production process automation and management informationization, accelerate the upgrading of tungsten mining equipment, promote the construction of digital and information mines, and form a new mining development that meets the requirements of ecological civilization construction. mode.

The second is to accelerate the digitalization, automation, intelligence and enterprise management information construction of tungsten smelting and processing enterprises, to create digital enterprises and smart high-end industries, and to promote high-quality and green development of tungsten smelting.

The third is to accelerate industrial transformation and upgrading, innovate corporate development strategies, respond to business changes in the new era, and comprehensively improve the quality, efficiency and competitiveness of China's tungsten industry. Aiming at the frontier of science and technology in the development of tungsten industry, strengthening basic research, realizing breakthroughs in forward-looking basic research and leading original achievements; focusing on intensive processing technology, green metallurgy technology, resource development and comprehensive utilization technology, heavy metal pollution prevention and control technology, etc. Solve the "bottleneck" problem that plagues the development of the tungsten industry, such as prominent structural contradictions and increased pressure on environmental protection.

Improve laws and regulations related to the development and utilization of tungsten resources

First, speed up the revision process of the Mineral Resources Law, establish relevant laws related to the Mineral Resources Law, improve relevant policies and measures for the development and utilization of tungsten resources, strengthen policy guidance and supervision, and better exert market regulation and government regulation. Role, scientific regulation of the "total gate" of tungsten resource allocation.

The second is to accelerate the study and formulation of the "National Strategic Mineral Resources Reserve Law", as well as the "Regulations on the Management of State Material Reserves" and "Regulations on the Management of Mineral Reserves" and other relevant regulations and policy documents, establish a strategic reserve system for tungsten resources, and accelerate the advancement of tungsten mines nationwide. Pilot of mineral reserves.

The third is to gradually improve the mature and effective departmental regulations and normative documents into national regulatory documents, and gradually create a law-enforcement and law-abiding environment that “can be prohibited without law” and improve industrial policies. The execution of the company will effectively improve the business environment of the company.

Encourage and support the construction of tungsten resource crisis mine resource replacement projects and the upgrading of mining technology and equipment

China's tungsten mining has been going through 111 years. At present, there are 10 tungsten mines that have been mined for 100 years or more. The old tungsten mines are facing depletion of resources, and the mining rights of tungsten mines in the ecological red line are withdrawn. The replacement of tungsten mine resources is imminent.

First, the exploration of the deep side of the old mining area has achieved remarkable results. It should actively support the development of deep-side resources in the old mines and extend the service life of the mines. Policy support for existing mining rights and exploration rights that need to be integrated, or existing mining enterprises that are due to the exhaustion of resources within the scope of mining rights and the use of the original production system to expand the scope of exploration or adjacent areas of deep-side exploration To solve the historical problems of long-term accumulation of tungsten mines, maintain the stability of mining areas, and provide conditions and guarantee for the green development of tungsten mines and the transformation of mining.

Second, in accordance with the central government's relevant regional economic support policies and the support direction determined by the State Council's poverty alleviation and development, the development and development of tungsten resources with underdeveloped regional economy will be conditionally approved, and support will be provided for the fight against poverty.

Third, due to historical reasons, China's tungsten mining and processing technology and equipment development and upgrading