China Post Securities·2025-05-20 01:23Investment Rating - The industry investment rating is "Strong Outperform" [1] Core Viewpoints - Tungsten is a significant strategic resource, widely used in various industries, and its price has risen to 161,000 yuan/ton, the highest since 2013, due to supply tightening and supportive policies [2][19] - The global tungsten resource distribution is concentrated, with China holding 55% of reserves and 83% of production, and no new mines expected to come online in the next two years [2][29] - Demand for tungsten is expected to improve significantly due to large-scale equipment updates and supportive policies, particularly in the machinery and aerospace sectors [2][54] - Export controls implemented by China in February 2025 have strengthened the strategic nature of tungsten resources, with a projected global supply-demand gap of 5,433 tons by 2027 [2][19] Supply Summary - Domestic supply is tightening, with the first batch of tungsten mining indicators for 2025 reduced by 4,000 tons compared to 2024, leading to a 6.45% decrease in total mining quotas [33] - China's tungsten production is expected to decline due to the lack of new mining projects and decreasing ore grades, with the first batch of mining indicators for 2025 set at 58,000 tons [33][29] - The industry is experiencing consolidation, with larger companies dominating production as smaller firms exit the market due to regulatory pressures [33][29] Demand Summary - The demand for tungsten is closely linked to industrial development and macroeconomic conditions, with hard alloys being the primary application, accounting for 58.51% of tungsten consumption in 2024 [50] - The demand for tungsten materials is expected to rise, particularly in the photovoltaic sector, where tungsten wire is gaining traction due to its superior performance [62][66] - A large-scale equipment update initiative is expected to boost demand for tungsten, with significant investments planned across various sectors [54][57]