Core Viewpoint - Xianglu Tungsten Industry (002842) emphasizes that tungsten is a rare metal and an important strategic material widely used across various sectors of the national economy [1] Supply and Demand Analysis - Most tungsten projects in China are expected to commence production in three years, while the progress of new tungsten concentrate projects globally is slow [1] - It is anticipated that the increase in raw material supply will be limited by 2025, with a long-term upward trend in supply expected [1] - The tungsten market is projected to remain tight in 2025, supported by rigid growth in raw material costs, indicating that the market will maintain a relatively high operating status [1]

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]

Summary of Conference Call Records Industry Overview - The records focus on the tungsten industry, specifically the production and market dynamics of tungsten products in the first quarter of 2025 [1][2][3]. Key Points and Arguments - **Production Trends**: In Q1 2025, tungsten concentrate production increased by less than 1% year-on-year, while hard alloy production rose by nearly 10%, indicating a shift in the industry focus towards downstream products [1]. - **Export and Import Dynamics**: Exports of tungsten products saw a cumulative decline of 27% in Q1 2025, primarily due to policy adjustments. Imports, however, increased by 20%, with tungsten ore imports growing over 40% [1][2]. - **Price Movements**: Tungsten prices rose by 15% year-on-year in Q1 2025, continuing a trend that began in 2023. The price is expected to fluctuate between 20% and 30%, with an average price potentially reaching around 160,000 yuan [1]. - **Regulatory Impact**: Current regulations do not completely ban exports but manage them through dual-use item controls. This has led to restrictions on raw material exports while allowing deep-processed products to remain accessible [2]. - **Emerging Demand**: The demand for tungsten from nuclear fusion experimental reactors is projected to exceed 3,000 tons, accounting for about 5% of China's consumption. This demand is expected to grow as construction of various experimental reactors accelerates [2]. Additional Important Insights - **Supply Chain Challenges**: The construction of new tungsten mines, such as the Dahuatang mine, is expected to take 2-3 years, while the Zhuxi mine faces delays due to unresolved mining rights [3]. - **Sector-Specific Growth**: The hard alloy sector experienced a demand increase of nearly 9%, driven by applications in construction, mining, and roadwork. The wood processing sector saw a growth rate of 15%, indicating strong market potential [3]. - **Inventory Levels**: Current industry inventory is low, and the growth of deep-processed products is outpacing that of raw materials, exacerbating inventory tightness [3]. - **Long-term Supply Outlook**: The Bakuta mine is expected to release 7,000 tons of metal capacity in its first phase, with full production taking 1-2 years. However, this new supply is unlikely to significantly alter the global tungsten market's supply-demand balance [4][5].

Summary of Tungsten Industry Conference Call Industry Overview - The tungsten market is expected to remain tight in 2025, with no significant increase in supply and stable demand, leading to an optimistic outlook. The average price for the year may reach around 160,000 yuan, with a fluctuation range of 20%-30% [1][7] - In Q1 2025, tungsten exports significantly decreased due to policy adjustments, with a cumulative decline of 27% by March. However, imports increased by 20% year-on-year, with tungsten concentrate imports growing by over 40% [1][3] Key Points on Demand and Supply - The demand for tungsten is expected to increase significantly due to nuclear fusion test reactors, with an estimated demand of over 3,000 tons of metal, accounting for about 5% of total consumption. The acceleration of domestic and international experimental reactor construction and commercialization is driving this demand [1][6] - The first batch of tungsten quotas for 2025 has been reduced by 4,000 tons, marking the largest reduction in five years. The strengthening of the Mineral Resources Law may lead to more policies managing strategic metals, presenting development opportunities for tungsten [1][9] - The Bakuta tungsten mine in Kazakhstan is expected to release 2,500-3,000 tons of metal in 2025, but the growth in domestic demand in China may offset this increase, resulting in limited impact on global supply and demand [1][10] Production and Inventory Insights - In Q1 2025, the tungsten industry maintained stable operations, with tungsten concentrate production increasing by less than 1% year-on-year. The hard alloy segment saw a 9.9% increase, indicating a shift in the industry chain focus [2][4] - Current tungsten industry inventory levels are low, with deep processing product increases outpacing raw material growth. Prices are higher than the same period last year, and it is expected that inventory will not see significant increases this year [4][17] Price Trends and Influencing Factors - Tungsten prices increased by 15% year-on-year in Q1, primarily due to the ongoing tight supply-demand situation established in 2023 and 2024. Despite insufficient order saturation, production is still growing, albeit at a slow pace [5][27] - The price increase in 2024 was influenced by geopolitical factors such as conflicts in the Middle East and Ukraine, while the price increase in 2025 is expected to be driven by domestic demand and regulatory policies [8][9] Export and Import Dynamics - The export of tungsten is approximately 30,000 tons annually, with domestic consumption around 64,000 tons. Exports account for about one-third of total demand, while domestic consumption makes up two-thirds [23] - Hard alloy products, including tools, are not subject to export restrictions, while raw materials require licensing. In 2024, hard alloys accounted for 32% of total exports, with raw materials exceeding 50% [16][25] Future Outlook - The global tungsten production in 2025 is expected to remain flat compared to last year, with limited growth in domestic production offsetting the increase from the Bakuta mine. Demand growth in tungsten materials, chemicals, alloys, and hard alloys is anticipated [32] - There is uncertainty regarding strategic reserve actions for tungsten in 2025, with potential interventions in the market depending on price levels and military supply needs [30][31]