Investment Rating - The report maintains an "Overweight" rating for the tungsten industry, indicating a forecasted investment return exceeding the market benchmark index by 5% to 15% over the next 6-12 months [5]. Core Insights - The tungsten market is experiencing a significant demand surge driven by the launch of the Yajiang hydropower project, which is expected to substantially increase the demand for tungsten in shield tunneling applications [1]. - The price of tungsten concentrate has reached a historical high of 182,500 RMB per ton as of July 21, 2025, with continuous price increases since May 13, 2025 [1]. - Future demand for tungsten is anticipated to grow from multiple sectors, including photovoltaic tungsten wire, military applications, and controlled nuclear fusion, alongside the demand from the Yajiang hydropower project [2]. - The supply of tungsten ore is constrained due to a significant reduction in mining quotas, with the first batch for 2024 set at 62,000 tons, a decrease of 1,000 tons from 2023, and a further reduction to 58,000 tons for 2025, marking a 6.45% decline [2][14]. - Export control policies have tightened the overseas tungsten market, leading to price increases in international markets, with European tungsten prices significantly higher than domestic prices [3]. Summary by Sections Demand Drivers - The Yajiang hydropower project, with a total investment of approximately 1.2 trillion RMB, is expected to significantly boost the demand for tungsten used in tunnel boring machines and other mining tools, which account for about 26.33% of total tungsten demand [1]. - The military sector is projected to see a 42% year-on-year increase in tungsten product orders, including hard alloy tools and armor-piercing projectiles [2]. Supply Constraints - The tightening of mining quotas reflects stricter regulatory measures in China's mining industry, which may further limit the production capacity of smaller mining enterprises [2]. - The first batch of tungsten mining quotas for 2024 and 2025 indicates a trend of decreasing supply, which is expected to maintain a tight balance in the tungsten market [2][14]. Price Trends - The report anticipates that while tungsten prices may experience some fluctuations, they are likely to remain at elevated levels over the next three years due to ongoing supply constraints and increasing demand from various sectors [4]. - The price disparity between domestic and international tungsten markets is notable, with European prices significantly higher, influenced by recent export control measures [3].