US Trade War Set Off the Price of Tungsten

After Trump imposed tariffs and imposed trade sanctions on Rusal, the LME aluminum price rose to a nearly seven-year high.

In addition to aluminum, who is the next metal that may rise?

ICBC International Raw Materials Industry General Analyst Zhao Dongchen told the Interface News Reporter that developments in China-US trade friction will have a critical impact on the extent of tungsten growth.

On April 23, the average price of domestically produced black wolfram concentrate was 110.5 thousand yuan per ton, and the average price of APT (processed ammonium paratungstate and tungsten concentrate) was 170,500 yuan per ton.

From 2011 to 2016, tungsten prices continued to slump, and the average price of domestically produced wolframite concentrates of more than 65% was 67,000 yuan/ton in 2016.

Starting from July 2016, tungsten concentrates and APT prices began to rebound steadily. By September 2017, tungsten prices soared by 50% year-on-year, and the average domestic tungsten wolfram concentrate price of over 65% was up to 120,000 yuan/ton.

Tungsten is listed as a strategic metal by China and is called a key commodity by the EU. It is mainly used in automobiles, integrated circuit triodes, aerospace development, communications technology, and military industries.

Zhao Dongchen said that if trade frictions escalate, China may impose anti-sanctions on the United States in the field of tungsten resources. "If China exports tungsten resources to raise tariffs, lower quotas, or even stop exporting, it will bring about a substantial increase in the prices of international tungsten products. For the United States, its domestic production of hard alloys will have a disruptive impact on its downstream. There will be serious negative effects in the industrial sector."

China supplies 80% of the world's tungsten raw materials, mainly in Jiangxi, Hunan and Guangdong. China imposed total mining restrictions on tungsten. In 2017, the Ministry of Industry and Information Technology of China issued a total tungsten control index of 91,300 tons, which was the same as last year.

Zhao Dongchen said that the tungsten industry in the United States is mainly located in the deep processing section of the tungsten processing industrial chain, and its tungsten resources are more imported from intermediate products, and its dependence on China’s imports is extremely high.

According to the data of the US Geological Survey and Statistics Bureau, the imports of tungsten ore and concentrate from the United States mainly come from Bolivia, Spain and Portugal, and the proportion from China is less than 1%. However, the United States Tungsten Industry's deep-processing link has a high degree of import dependence on China. More than 60% of APT imports come from China, and more than 80% of tungsten oxide imports originate from the mainland of China and transit trade via Hong Kong. In addition, about 35% of tungsten powder imports come from China, about 55% of tungsten imports come from China, and about 40% of tungsten carbide powder imports come from China.

From the aspect of alternative resources, there are currently no tungsten projects under construction in the United States. There is limited room for other importing countries to expand their production capacity.

Zhao Dongchen analyzed that small and medium-sized enterprises such as the US Silver Predator have a number of planned projects, but have not started construction yet. Only overseas and other small and medium-sized enterprises such as Northcliff Resources have project reserves in Canada and other countries, and are currently in the early stages. The possibility of putting into production within the next three years is very low.

In addition to China, most of the APT imports from the United States come from Germany, while Germany has limited capacity to expand production capacity. In tungsten powder and tungsten materials imports, the two major sources of imports from South Korea and Japan are mainly from China; tungsten oxide is mainly from China; There are few other alternative import sources.

China is implementing environmental protection inspections for resource companies such as tungsten, and coupled with the recovery of foreign demand, ICBC International is optimistic about the price trend of tungsten ore and intermediate products in its processing industry chain within the next three years.