Minsheng Securities·2025-05-16 08:05Investment Rating - The report recommends a "Buy" rating for key companies in the tungsten industry, specifically focusing on Zhongtung High-tech, Zhangyuan Tungsten, and Xiamen Tungsten [4]. Core Insights - Tungsten prices have been on an upward trend since April 2020, with the price center continuing to rise due to tight supply and export controls, reaching new highs since 2017 [1][9]. - China holds a dominant position in global tungsten resources, accounting for 52.5% of tungsten reserves and 82.3% of tungsten production in 2024, with strict government controls on mining [2][27]. - The demand for tungsten is expected to grow steadily, driven by emerging applications in photovoltaic tungsten wire and military sectors, with military spending projected to reach $27.18 billion in 2024, a 9.4% increase from 2023 [3][22]. - The supply-demand balance for tungsten remains tight, with a forecasted shortfall in tungsten concentrate, leading to a positive long-term outlook for tungsten prices [3][51]. Summary by Sections Section 1: Strategic Attributes of Tungsten - The announcement of export controls on tungsten-related items has led to a divergence in domestic and international tungsten prices, with domestic prices experiencing a temporary decline before rebounding [1][9]. - Tungsten is recognized as a strategic metal due to its hardness, high melting point, and resistance to corrosion, making it essential in various industries, including transportation, mining, and military applications [1][38]. Section 2: Supply Side Dynamics - China's tungsten mining output is strictly controlled, with the total mining quota increasing from 91,300 tons in 2016 to 114,000 tons in 2024, reflecting a compound annual growth rate (CAGR) of 2.81% [2][32]. - The first batch of tungsten mining quotas for 2025 has been set at 58,000 tons, a decrease of 4,000 tons from the previous year, indicating a continued tightening of supply [2][32]. Section 3: Demand Side Dynamics - The total consumption of tungsten in downstream applications is projected to grow by 3.52% in 2024, with the hard alloy sector being the largest consumer [49]. - Emerging applications, particularly in photovoltaic technology and military sectors, are expected to drive demand for tungsten, with significant growth in sales of photovoltaic tungsten wire [3][22]. Section 4: Investment Recommendations - The report emphasizes the strategic importance of tungsten resources and suggests focusing on companies like Zhongtung High-tech, Zhangyuan Tungsten, and Xiamen Tungsten due to their potential for growth amid increasing demand and limited supply [3][4].