Group 1 - The core viewpoint is that the tungsten industry is expected to undergo a systematic re-evaluation due to strengthened regulations, declining resource grades, and geopolitical factors, leading to limited future supply growth [1][3] - The Ministry of Natural Resources has reduced the first batch of tungsten mining quotas for 2025 to 58,000 tons, a decrease of 4,000 and 5,000 tons compared to 2024 and 2023 respectively, indicating a clear tightening of mining regulations [1] - China's tungsten ore grade has declined from 0.42% in 2004 to 0.28% in 2020, which has significantly limited the release of production capacity due to long-term high-intensity mining [1] Group 2 - The downstream applications of tungsten are expanding, with a projected consumption of 55,300 tons in 2024, reflecting a year-on-year growth of 3.9%, driven by manufacturing upgrades and high demand in mining and machinery sectors [2] - The Yarlung Tsangpo River downstream hydropower project, with a total investment of 1.2 trillion yuan, is expected to significantly boost the demand for tungsten materials in tooling and mining equipment [2] Group 3 - Export controls on tungsten and the imposition of tariffs by the U.S. are reshaping the industry landscape, with China implementing export restrictions on various tungsten products to promote domestic industrial upgrades [3] - The U.S. has announced a 25% tariff on certain tungsten products imported from China, aimed at weakening China's influence in critical metals and enhancing the self-sufficiency of strategic industries [3]

Core Insights - In August, the domestic 65% tungsten concentrate price increased by 32.3% to 262,500 CNY/ton, with APT rising by 31.6%, tungsten carbide by 35.7%, and tungsten powder by 36%. In Q2, the domestic 65% tungsten concentrate price surged over 80%. The report suggests that China's control over tungsten metal will have a long-term positive impact on tungsten prices, similar to the effects seen with rare earths [3]. Advanced Manufacturing Group - BYD reported a revenue of 371.3 billion CNY for the first half of the year, a year-on-year increase of 23%, with a net profit of 15.5 billion CNY, up 14% year-on-year. The growth is attributed to a 32.49% increase in revenue from the new energy vehicle segment, a 50.49% rise in overseas revenue, and a 53.05% increase in R&D investment [6]. - Despite strong revenue and profit figures, concerns were raised regarding a 191.8 billion CNY gap between accounts payable and receivable, high inventory levels at 145.5 billion CNY, low technology R&D conversion rates, and a significant drop in Q2 net profit, which fell to 6.4 billion CNY, down 31% quarter-on-quarter and 30% year-on-year [6]. Consumption Group - Meitu Inc. reported an adjusted net profit of 467 million CNY for the first half of 2025, a substantial increase of 71.3% year-on-year, exceeding market expectations. The adjusted net profit margin reached 25.7%, up 8.8 percentage points year-on-year. The core imaging and design business generated 1.35 billion CNY in revenue, a 45.2% increase, accounting for 74.2% of total revenue [9]. - The growth strategy focused on "focusing on core + efficiency improvement," which involved shrinking non-core businesses to concentrate resources, leading to improved profitability driven by the high growth of the imaging and design business [9].

Investment Rating - The report assigns a positive investment rating, suggesting subscription to the IPO based on the anticipated demand and market conditions [10]. Core Insights - Jaxin International (3858.HK) is a tungsten mining company focused on the Bakuta tungsten mine in Kazakhstan, which is one of the largest tungsten resources globally [1][3]. - The company plans to dual-list on the Hong Kong Stock Exchange and the Astana International Exchange [1]. - The Bakuta project is expected to commence commercial production in April 2025, with a target mining and processing capacity of 3.3 million tons of tungsten ore in 2025, and an anticipated increase to 4.95 million tons per year by Q1 2027 [1]. Company Overview - Jaxin International is primarily engaged in the development of the Bakuta tungsten mine, which is noted for its significant tungsten oxide (WO3) resources [1]. - The company has established sales agreements for white tungsten concentrate with Jiangxi Copper and Jiangxi Tungsten for 2025 and 2026 [1]. Financial Performance - The company is projected to have no revenue before 2025, with an expected revenue of HKD 126 million by June 2025 [2]. - The net losses for the years 2022, 2023, and 2024 are reported at HKD 93.661 million, HKD 78.92 million, and HKD 172.97 million respectively, with a reduced loss of HKD 5.996 million by June 2025 [2]. Industry Status and Outlook - China is the largest tungsten resource country, holding over 50% of global reserves, but its tungsten production has decreased from 69,000 tons in 2019 to 67,000 tons in 2024 [3]. - The demand for tungsten is increasing in various sectors, with consumption rising from 47,300 tons in 2019 to 55,300 tons in 2024, and projected to reach 65,500 tons by 2029 [3]. Advantages and Opportunities - The Bakuta tungsten mine is strategically located and benefits from the Belt and Road Initiative, enhancing its market potential [4]. - The company has a strong management team with valuable industry experience, which supports its growth and expansion [4]. Use of Proceeds - Approximately 55% of the net proceeds (HKD 598.3 million) will be allocated to the development of the Bakuta project, with 10% for ammonium paratungstate (APT) capacity development, and 25% for repaying bank loans [6]. IPO Details - The IPO is set to launch on August 28, 2025, with an issue price of HKD 10.92 and a total fundraising amount of HKD 1.199 billion [8]. - The post-IPO market capitalization is estimated at HKD 47.96 billion [8].

Core Insights - Tungsten has emerged as a critical resource in military industrial applications, with a melting point of 3400°C and hardness second only to diamond, making it essential for armor-piercing ammunition, missile engine components, and advanced chip manufacturing [1][7]. Resource Comparison - Global tungsten reserves are approximately 4.6 million tons, with China holding 2.4 million tons (52.17%), Russia at 450,000 tons, and the U.S. at only 140,000 tons [3]. - In China, the Jiangxi Gannan region hosts significant tungsten deposits, with the Zhu Xi tungsten mine and Wu Ning Da Hu Tang tungsten mine holding reserves of 2.86 million tons and 1.06 million tons, respectively, surpassing the combined reserves of the U.S. and Russia [3]. U.S. and Russian Challenges - The U.S. has ceased commercial tungsten mining since 2015, relying on imports for 58% of its tungsten alloy needs, primarily from China [5]. - Russia's tungsten mining is hindered by extreme environmental conditions and high transportation costs, limiting its production capacity to 3,000 tons per year, which is only one-twentieth of China's output [5]. Military Applications - Tungsten's military value is highlighted in the Ukraine conflict, where tungsten alloy armor-piercing shells can penetrate thick armor due to their high density [7]. - The U.S. military consumes over 6,000 tons of tungsten annually, and any disruption in the supply chain could cripple half of its weapon production lines [7]. Supply Chain Control - China controls the entire tungsten supply chain, from mining to high-end processing, implementing annual quotas and monopolizing deep processing technologies, which increases costs for Western companies by 30% [9]. - Export restrictions on tungsten products starting in 2025 have already led to a 25% drop in export volumes, pushing international tungsten prices close to historical highs [9]. Historical Context - The competition for tungsten resources dates back to the 1930s, with significant historical events involving tungsten trade impacting military capabilities during World War II and the Cold War [12][14]. - The ongoing "tungsten war" reflects the geopolitical struggle for resource control, with China transitioning from a resource exporter to a technology price setter [16]. Future Implications - The strategic importance of tungsten is underscored by its applications in advanced technologies, such as nano tungsten wires for chip etching and tungsten-molybdenum alloys for hypersonic missiles [16]. - The potential for a supply disruption from China is recognized as a top-tier risk for the U.S. military, with significant implications for various industries, including aerospace and semiconductors [16].

Core Viewpoint - The prices of tungsten concentrate and major tungsten products have surged to historical highs due to supply tightening, emerging demand, and policy adjustments, benefiting leading companies in the tungsten industry [1] Group 1: Industry Overview - As of August 2025, the price of 65% black tungsten concentrate has exceeded 200,000 yuan/ton, with a year-to-date increase of nearly 40% [1] - Ammonium paratungstate (APT) has reached 291,000 yuan/ton, up 37.9% since the beginning of the year [1] - Tungsten powder prices have risen to 438 yuan/kg, reflecting a 38.6% increase [1] Group 2: Leading Companies - **Xiamen Tungsten (600549)**: A global leader in the tungsten industry chain, covering mining, smelting, and deep processing, with tungsten and molybdenum business revenue expected to account for nearly 50% in 2024 [3] - Dominates the photovoltaic tungsten wire market with a Q2 2025 shipment of 80 billion meters and over 65% global market share [3] - Collaborates with major clients like Longi Green Energy and TCL Zhonghuan, with a projected net profit growth of over 30% by 2025 [3][4] - **China Tungsten High-Tech (000657)**: A leading hard alloy manufacturer under the Minmetals Group, holding over 30% global market share and a 70% self-sufficiency rate in resources [5] - High-end products are expected to account for 55% of revenue by 2025, with a gross margin increase to 35% [6] - Benefits from tightened tungsten mining quotas, with a profit increase of 120 million yuan for every 10,000 yuan rise in tungsten prices [7] - Acquired Germany's HPTec Group to enhance high-end tool technology [8] - **Zhangyuan Tungsten (002378)**: Among the top three tungsten resource companies in China, with over 60% self-sufficiency in tungsten concentrate [9] - Revenue increased by 32.65% year-on-year in the first half of 2025, with high-end product sales reaching 40% [10] - Plans to add 7,000 tons of tungsten powder capacity through a technology upgrade project [11] - **Xianglu Tungsten (002842)**: A core supplier of hard alloys, benefiting from the recovery in the machine tool industry [12] - Machine tool output increased by 18.3% year-on-year from January to July 2025, boosting tungsten demand [13] - Active in the small metals sector, with a stock price increase of over 30% in 2025 [14] - **Luoyang Molybdenum (603993)**: The second-largest tungsten producer globally, with an expected tungsten concentrate output of 12,000 tons in 2025 [16] - Developing tungsten resources in the Democratic Republic of Congo, with a cost advantage of 15% lower than domestic costs [17] - Anticipates a 22% year-on-year increase in tungsten consumption in the power battery sector by 2025 [18] - Currently trades at a price-to-earnings ratio of 12, below the industry average of 18, indicating significant valuation recovery potential [19] Group 3: Supply and Demand Dynamics - Supply constraints are evident with a 6.45% year-on-year reduction in tungsten mining quotas for 2025 and the closure of 18 mines due to environmental policies [20] - The global demand for tungsten is expected to exceed 4,500 tons by 2025, driven by the photovoltaic sector and military upgrades [22][23] - The price of tungsten is projected to rise, with estimates suggesting it may exceed 460,000 yuan/ton by Q3 2025, and a long-term price center could move to 500,000 yuan/ton [22]

Summary of Tungsten Industry Conference Call Industry Overview - The tungsten mining indicators in China have been tightened for two consecutive years, with the first batch of 2025 indicators decreasing by 6.5% to 58,000 tons, alongside increased efforts to combat illegal smuggling and enhance environmental inspections, aimed at controlling production and consolidating policy effects [2][4][6] - The global supply-demand relationship for tungsten is tightening, with an expected gap to continue expanding from 2026 to 2028 [2][3] - The price of tungsten concentrate in China has surged to 193,000 yuan per ton, marking a cumulative increase of 36% since the beginning of the year, reaching a historical high [2][5] Key Points and Arguments - **Export Controls**: China has implemented export controls on heavy tungsten acid, tungsten oxide, and tungsten carbide, leading to a short-term decline in export volumes. However, due to high overseas premiums, some products have seen a recovery, with ammonium paratungstate exports increasing by 70% year-on-year [2][4][6] - **Geopolitical Factors**: Conflicts between India and Pakistan have highlighted tungsten's strategic metal value, contributing to price increases [4] - **Supply Constraints**: Domestic and international supply constraints are expected to drive long-term price increases, with the market entering a bullish phase [3][4][17] - **Price Disparity**: There is a significant price disparity between domestic and overseas tungsten prices, with overseas APT prices significantly higher than domestic prices. Chinese companies can maintain growth by increasing exports to regions not subject to the 301 tariffs [2][16][20] Policy Measures - **Mining Quota Control**: China has a history of controlling tungsten mining quotas since 1991, with the first batch for 2025 set at 58,000 tons, a decrease from previous years [6] - **Export Control Implementation**: Export controls were strengthened in February 2025, leading to a drop in overall tungsten product exports, although certain downstream products like tools and blades have seen growth [22][23] - **Environmental and Smuggling Crackdown**: Increased efforts to combat illegal smuggling and enhance environmental inspections have been noted, effectively reducing over-extraction rates [6] Global Responses - **EU and US Initiatives**: Both the EU and the US have taken measures to secure critical metal supplies, with the EU setting local mining, processing, and recycling targets, and the US enhancing domestic production capabilities through legislation and international cooperation [7][9][12] - **US Tariffs**: The US has imposed a 25% tariff on Chinese tungsten concentrate and downstream products, aiming to restructure the supply chain and increase tungsten stockpiles in the fiscal years 2024-2025 [13][14][15] Future Supply and Demand Dynamics - **Supply Growth Limitations**: Global supply growth remains constrained, with emerging industries and geopolitical security demands driving long-term demand growth [17][19] - **Production Forecasts**: Global tungsten production is expected to rise from 81,000 tons in 2023 to 90,300 tons by 2028, with a compound annual growth rate of 2.57% [18][24] - **Chinese Market Drivers**: Demand in China is driven by manufacturing upgrades and large infrastructure projects, with significant growth in hard alloy tungsten material consumption [19] Price Trends and Predictions - **Short-term Price Outlook**: In the short term, the tightening supply-demand relationship and low global inventories are expected to benefit Chinese tungsten concentrate prices, potentially leading to new historical highs [24] - **Long-term Price Projections**: Long-term projections indicate that the global supply-demand gap will further widen, driving prices upward and indicating a bullish market trend [24] Investment Insights - **Company Performance Trends**: Analysis of major listed companies indicates stable profit growth driven by resource injection and downstream product price increases [26] - **Investment Selection Criteria**: Investors are advised to focus on companies with strong upstream resource development potential and robust downstream pricing capabilities, particularly those benefiting from high overseas premiums [27][28]

Industry Overview - The tungsten market prices have continued to rise, with domestic black tungsten concentrate, APT, and tungsten iron prices reported at 179,000 yuan, 260,000 yuan, and 265,000 yuan per ton respectively, marking increases of 25%, 23.5%, and 24.4% since the beginning of the year [1] - A new round of price adjustments by institutions and tungsten enterprises has enhanced market bullish sentiment, supporting the upward trend in tungsten prices [1] - The Ministry of Natural Resources issued a total mining quota of 58,000 tons for tungsten in April, which is a reduction of 4,000 tons and 5,000 tons compared to 2024 and 2023 respectively [1] - The quality of tungsten ore in China has declined, with tungsten ore and concentrate grades decreasing from 0.42% and 66.57% in 2004 to 0.28% and 56.08% in 2020, further limiting capacity release [1] - There has been no significant increase in domestic supply in recent years, and overseas supply from Bakuta and Sandong tungsten mines may be lower than expected, reinforcing tight supply logic [1] Company Insights - Zhongtung High-tech is a leading comprehensive supplier of hard alloy tools in China, forming a complete tungsten industry chain that includes tungsten mining, smelting, hard alloys, and deep processing [3] - Zhangyuan Tungsten Industry leverages its tungsten resource advantages and integrated industry chain layout, continuously enhancing its competitiveness in the high-end hard alloy products sector [4]

Industry Overview - Tungsten carbide (WC) is a compound made of tungsten and carbon, known for its high hardness, high melting point, and excellent conductivity, making it essential in various industrial applications [1][2][10] - The production of tungsten carbide in China is projected to remain above 60,000 tons from 2022 to 2024, with an estimated production of approximately 68,000 tons in 2024, reflecting a year-on-year increase of 2000 tons [10][12] Market Dynamics - The demand for tungsten carbide has been positively influenced by the continuous development of downstream industries, with China being the largest producer and exporter of tungsten products [1][12] - In 2024, China's tungsten carbide exports are expected to be 4,146.8 tons, generating an export value of 17,934.1 million USD, although there has been a decline in export volume in early 2025 due to new export controls [12][13] Policy Support - The Chinese government has recognized tungsten as a strategic resource, implementing policies to support the deep processing of tungsten, including plans for significant tungsten smelting projects and the development of tungsten-based new materials [6][8][24] - Recent government initiatives aim to enhance the tungsten industry chain, focusing on exploration, mining, and deep processing to create a complete industrial chain [8][24] Industry Chain - The tungsten carbide production chain includes upstream raw materials such as tungsten concentrate and graphite, with the midstream focusing on the production of tungsten carbide, and the downstream applications spanning aerospace, defense, and high-end manufacturing [16][18][20] - The production of tungsten concentrate in China is projected to reach 130,500 tons in 2024, marking a year-on-year increase of 1.95% [18] Application Areas - Tungsten carbide is widely used in defense and aerospace for manufacturing high-performance military equipment, as well as in high-end manufacturing for precision tools and components [24][25] - The material is also utilized in the semiconductor industry and renewable energy sectors, showcasing its versatility and importance in modern technology [24][25] Future Trends - The demand for tungsten carbide is expected to continue growing as downstream applications expand, with increasing performance requirements driving technological advancements in production [25] - Environmental policies are pushing for greener production methods in the tungsten carbide industry, aligning with national goals for sustainable development [25]

Investment Rating - The report rates the tungsten industry as "Positive" [4] Core Insights - The global tungsten industry is experiencing a complex situation characterized by resource control competition and technological upgrades, with supply chain camp formation [2][12] - China's tungsten industry is undergoing a transformation towards high-value-added products, driven by domestic upgrades and international market expansion [3][39] - The geopolitical landscape is influencing regional procurement trends, particularly in emerging markets like Russia and ASEAN countries [3][51] Summary by Sections 1. Background of the Game: Strategic Value of Tungsten Resources and Supply System - 80% of global tungsten resources come from China, while high-end application technologies are dominated by Europe and the US, leading to a clash between China's outward industrial upgrade and the US's protection of its domestic industries [12][13] - The US aims to reduce dependency on Chinese tungsten through tariffs and domestic mining initiatives, while China seeks to maintain its resource advantages and expand its international market share [2][12] 2. Policy Duel: China's and the US's Dual Strategies - China's tungsten industry policies focus on transformation and control, implementing measures such as export tariffs and quotas to manage production and sales [16][22] - The US is working to lower its reliance on Chinese tungsten by diversifying import sources and increasing domestic production through the Defense Production Act [25][30] 3. Export Trends: Acceleration of Transformation in the Tungsten Industry - China's tungsten exports are experiencing a decline in overall volume but are shifting towards high-value products, with significant growth in exports to Russia and ASEAN countries [39][51] - The export structure is changing, with a focus on high-end products like hard alloy tools, which have seen price increases and growing demand [45][43] 4. Industry Opportunities: Focus on Regional Markets in Russia, Europe, and ASEAN - The geopolitical situation is driving regional procurement, with Russia emerging as a significant market for Chinese tungsten exports, showing a compound annual growth rate of nearly 70% from 2018 to 2024 [3][51] - The EU's rearmament plans are expected to stimulate demand for tungsten products, particularly in Germany, creating opportunities for Chinese manufacturers [3][51]

Core Viewpoint - The report from CICC highlights that the price of 65% WO3 tungsten concentrate in China has surpassed 173,000 yuan/ton, marking a year-to-date increase of 31,000 yuan and a cumulative rise of 21.8%, reaching a historical high. The firm anticipates a continued tightening of supply and demand dynamics due to limited production growth and increasing demand driven by emerging industries and safety concerns [1]. Supply and Demand Dynamics - The growth rate of tungsten production in China is slowing, with only Kazakhstan and South Korea expected to contribute significant supply increases in the short term. The global tungsten supply is projected to grow at a CAGR of 2.57% from 2023 to 2028 [2]. - Domestic demand is benefiting from emerging industries such as photovoltaic tungsten wire and robotics, while overseas demand is influenced by geopolitical conflicts, leading to increased demand for high-end equipment and strategic stockpiling. The global tungsten consumption is expected to grow at a CAGR of 2.61% during the same period [2]. Price Disparity and Export Opportunities - There is a noticeable divergence in domestic and international price systems, creating an arbitrage opportunity for tungsten product exports. Since the export controls were implemented in February, overseas APT prices have surged, while domestic tungsten concentrate prices remain strong. As of June 6, overseas APT prices exceeded domestic prices by 50,000 yuan/ton, with a premium rate of 22% [2]. - Despite a 20.1% year-on-year decline in overall tungsten product exports from January to April, exports of downstream tools and tungsten iron have shown robust growth in March and April [2]. Long-term Outlook and Industry Opportunities - The tightening supply-demand situation is expected to persist, with tungsten prices entering a bull market and likely to continue breaking historical highs. The supply-demand gap for tungsten is projected to expand from 18,300 tons in 2024 to 19,100 tons in 2028, with the gap representing -18.4% to -17.4% of global tungsten demand from 2024 to 2028 [3]. - The configuration opportunities for global tungsten industry leaders are becoming increasingly prominent, benefiting from resource injection, development, and simultaneous advancement in upstream resources and downstream high-end projects [3].