Summary of Tungsten Industry Conference Call Industry Overview - China holds the largest tungsten resources and production scale globally, accounting for over 80% of global production and 49% of consumption, significantly influencing the global tungsten market [2][4] - The tungsten industry has a complete supply chain from extraction to final products, with major applications in hard alloys (cutting tools, drill bits) and military materials [2][6] Key Points and Arguments - The current tungsten market faces a contradiction between tight upstream supply and insufficient downstream orders. Rapid price increases in raw materials have raised cost pressures for midstream alloy manufacturers, while downstream manufacturing orders have not seen significant growth, leading to potential losses in the midstream sector [2][7] - The easing of the US-China trade war has raised expectations for a recovery in downstream order demand, but upstream supply remains under national control, meaning that increased demand will not immediately reflect in upstream mining. The transmission effect will take at least a month, with longer processing cycles for tools and final products [2][9][10] - Major domestic tungsten producers include China Tungsten High-Tech and Xiamen Tungsten, while overseas companies like Sandvik and Kennametal focus more on product value addition and branding [2][11] Market Dynamics - Tungsten prices have risen approximately 20% since 2025, driven by export controls due to the US-China trade war, particularly on dual-use items, and a unified adjustment of tungsten mining quotas by domestic rare earth groups, leading to tight upstream supply [3][5][12] - The optimism in market expectations and insufficient inventory among domestic enterprises have contributed to the price increase, alongside speculative investments in the non-ferrous metals market [5][12] Challenges in the Tungsten Market - The market is currently challenged by tight upstream supply and a lack of downstream orders. Rising raw material prices are increasing cost pressures for midstream alloy manufacturers, while the reduction in orders has also led to a decline in secondary raw material production, affecting the prices of scrap and waste alloys [7][8] Emerging Applications - Although there is some demand for tungsten in the photovoltaic sector, its overall impact on supply and demand is limited. Research into using tungsten for battery materials is still in the experimental stage and has not yet significantly affected current supply and demand dynamics [8] Future Price Trends - The future price trajectory remains uncertain, with midstream sectors facing loss pressures. Current pricing is based on existing raw material prices plus processing fees. If future order volumes are substantial, there may be improvements, but no significant changes have been felt in the midstream sector yet [14] - Some industry experts believe that black tungsten concentrate prices may reach historical highs, with estimates suggesting prices could exceed 200,000 yuan per ton, although this view is not universally accepted [14]

Investment Rating - The report maintains a "Recommended" rating for the tungsten industry, indicating a positive outlook for the sector [3]. Core Insights - The tungsten quota has been reduced, leading to a continuous increase in tungsten prices. The Ministry of Natural Resources has set the total mining quota for tungsten at 58,000 tons for 2025, a decrease of 4,000 tons or 6.45% compared to 2024. This reduction is particularly pronounced in traditional tungsten mining regions like Jiangxi, likely due to increased mining depth and declining ore grades. As a result, tungsten prices have remained high, with black tungsten concentrate prices reaching 154,000 yuan per ton, an increase of 8.45% since early April 2025, nearing historical highs [6][6][6]. - Export controls on tungsten have been upgraded, and the Bakuta tungsten mine has commenced production. On February 4, 2025, the Ministry of Commerce and the General Administration of Customs implemented export controls on various tungsten-related products to protect strategic resources. The Bakuta tungsten mine, which began production in November 2024, aims for a processing capacity of 3.3 million tons of tungsten ore, with an expected output of over 6,000 tons. However, short-term overseas production increases are unlikely to alleviate current supply tightness [6][6][6]. - Macro policies may drive PMI recovery, with consumption expected to rebound. Since March, many hard alloy companies have issued price increases, reflecting the pressure of rising raw material costs on downstream sectors, which has further fueled tungsten price momentum. The global military industry’s rapid expansion is significantly boosting tungsten demand, particularly in defense applications. The current industry situation is characterized by tight tungsten supply, low demand, and low inventory levels, suggesting that a demand recovery could lead to further price increases [6][6][6]. - Investment recommendations favor companies involved in self-produced tungsten mining, cutting tools, and the entire industry chain. Companies to watch include China Tungsten High-tech, Xiamen Tungsten, Zhangyuan Tungsten, Xianglu Tungsten, and Oke Yi [6][6][6].