Multiple Tungsten Companies Continued to Lower Long-Term Contract Quotations, Tungsten Prices Fell Over 16% in More Than One Month, How Will the Market Perform Going Forward? [SMM Commentary]

SMM April 20 update:

China's tungsten prices recently retreated from highs, with wolframite concentrates falling 16.18% over more than a month. After lowering long-term contract prices for the first half of April, multiple tungsten enterprises continued to cut long-term contract prices for the second half of April. However, the magnitude of the latest cuts for the second half of April narrowed notably compared to the first half, which to some extent helped market sentiment gradually stabilize. Wait-and-see sentiment currently remains strong in the market, with the tug-of-war between upstream and downstream continuing. How will tungsten prices perform going forward?

Multiple Tungsten Enterprises Continue to Cut Long-Term Contract Prices

Multiple tungsten enterprises lowered their long-term contract prices for the second half of April, as detailed below:

A Jiangxi-based tungsten group released its long-term contract prices for the second half of April, setting the guidance price for national-standard grade-one wolframite concentrates at 910,000 yuan/standard tonne (65%WO3 basis), down 46,000 yuan/standard tonne (65%WO3 basis) from the first half of April.

Meanwhile, Chongyi Zhangyuan Tungsten Co., Ltd. also lowered its long-term contract procurement prices for the second half of April: 1 55% wolframite concentrates: 885,000 yuan/standard tonne (65%WO3 basis), down 45,000 yuan/standard tonne (65%WO3 basis) from the previous round; 2 55% scheelite concentrates: 884,000 yuan/standard tonne (65%WO3 basis), down 45,000 yuan/standard tonne (65%WO3 basis) from the previous round; 3 APT (national-standard grade-zero): 1.35 million yuan/mt, down 90,000 yuan/mt from the previous round. Notably, in the first half of April pricing round, Zhangyuan Tungsten's 55% wolframite concentrates and 55% scheelite concentrates had already been cut by 90,000 yuan/standard tonne (65%WO3 basis) each MoM.

Wolframite Concentrates Fell Over 16% in Just Over a Month

Since mid-to-late March, tungsten prices, which had repeatedly hit record highs, began to pull back under the combined impact of profit-taking by funds, downstream buyers staying on the sidelines due to high prices, and an overall adjustment in commodity markets. On April 20, wolframite concentrates (≥65%) were priced at 880,000–881,000 yuan/standard tonne (65%WO3 basis), with an average price of 880,500 yuan/standard tonne (65%WO3 basis), down 1.12% from the previous trading day. Compared with the historical high average tungsten price of 1,050,500 yuan/standard tonne (65%WO3 basis) on March 16, the average price of wolframite concentrates dropped by 170,000 yuan/standard tonne (65%WO3 basis) in just over a month, a decline of 16.18%.

Outlook

As long-term contract prices from leading tungsten enterprises were finalized, China's tungsten market sentiment turned mild. Major mines focused on long-term contract deliveries, with spot order prices fluctuating around long-term contract levels. APT smelter prices remained firm, and driven by the continued pullback in ore prices, APT industry margins showed a widening trend. Wait-and-see sentiment among downstream cemented carbide alloy enterprises has yet to fully dissipate, with enterprises mostly restocking on a just-in-need basis. However, industry inventory has been gradually declining, and a wave of restocking is expected ahead of the Labour Day holiday, which would drive a recovery in tungsten market trading volume. Meanwhile, the tight supply pattern of tungsten outside China remained unchanged. Cemented carbide plants in Japan and several other countries collectively raised their quotes, which was positive for the export and consumption of related products in China. In the short term, long-term contracts stabilized the tungsten market. As industry profit-taking positions were gradually cleared and downstream demand followed up, the tungsten market was expected to gradually stop falling and stabilize. Going forward, attention should be focused on tracking the actual pre-holiday restocking progress of cemented carbide alloy enterprises.