Improved Trading Boosted Tungsten Market Volume and Price Rebound, Post-Market Still Needs to Focus on End-Use Demand Follow-Through [SMM Tungsten Daily Review]

SMM June 3:

The tungsten market steadily rose this week, with related products across the industry chain posting across-the-board gains. Tungsten ore and APT markets recorded six consecutive increases. New orders from downstream powder enterprises began to gradually improve. Supported by increased trading volume and rising costs, powder enterprises successively raised their quotes. Downstream and end-user enterprises shifted from sporadic rigid-demand purchases to bulk purchasing, with bullish sentiment growing stronger. Price increases were concentrated in upstream raw materials and the APT segment, while deep-processed products passively rose following costs.

On the ore side, SMM's 65% wolframite concentrates price today was quoted at 450,500 yuan/standard tonne (65%WO3 basis), up 10,000 yuan/standard tonne (65%WO3 basis) from the previous trading day. In this round of rebound, the tungsten concentrates market had cumulatively risen by 50,000 yuan/standard tonne (65%WO3 basis). Some high-grade tungsten concentrates in the market were firmly offered, with some suppliers quoting around 480,000-500,000 yuan/standard tonne (65%WO3 basis). Major mines mainly shipped under long-term contracts, while some mines with inventory held back from selling in a wait-and-see stance. Moreover, south China recently entered the flooding season with frequent rainfall, where flash floods and heavy rains constrained mine extraction and short-distance transportation. Restricted circulation of tungsten concentrates also provided some support at the current market period. Going forward, attention should be paid to whether some enterprises have plans to auction off shipments and the long-term contract price guidance on June 5.

In the smelting APT segment, SMM's APT price today was quoted around 725,000 yuan/mt, up 20,000 yuan/mt from the previous trading day. In this round of rebound, the APT market had cumulatively risen by 80,000 yuan/mt. Downstream powder and other enterprises actively purchased, with active market inquiries and transactions. Some major players, in addition to actively picking up goods under long-term contracts, also flexibly purchased spot orders from the market to restock, driving improved trading volume. APT smelter industry operating rates were at low levels in May, with some smelters having just resumed production recently. Market supply increased only slightly MoM, and enterprises offered firmly. Some spot order transaction prices approached 800,000 yuan/mt. However, a portion of high-priced inventory existed in the industry, and current prices had not yet triggered the release of this inventory to the market. In the short term, attention should be paid to the situation of APT industry inventory being cleared.

The powder market performed mildly overall. Driven by cost support, the industry's transaction center also showed a stop-falling-and-rebound trend. Some enterprises reported that downstream cemented carbide alloy enterprises themselves had low inventory and were now entering the market to sign new restocking orders. In addition, the stop-falling-and-rebound in China's tungsten market stimulated an increase in ex-China orders for tungsten powder, tungsten carbide, and ammonium metatungstate. Some enterprises saw a notable increase in new export orders in just three trading days in June. As of now, the price spread between China's APT prices and those outside China remained at 1 million yuan/mt. Choosing Chinese tungsten raw materials and tungsten products offered better cost-effectiveness, but export growth for some products remained limited due to factors such as export policies. Today, SMM tungsten powder was quoted at 1,240 yuan/kg, tungsten carbide powder at 1,170 yuan/kg, with a cumulative increase of 150 yuan/kg in this round of price rises.

Scrap tungsten market: The scrap tungsten market saw coexisting trading enthusiasm and risks. Some earlier high-priced inventory had yet to be liquidated for profit, and the industry's bullish sentiment was strong. However, since March, in major recycled tungsten smelting provinces such as Jiangxi and Hunan, reverse invoicing for scrap tungsten recycling tightened due to factors such as rectification of invoice-related economic activities. Smelters mostly suspended procurement of non-invoiced recycled sources. Scrap tungsten recycling enterprises are advised to monitor subsequent smelter demand. At this stage, compliant invoiced sources became the preferred choice for smelting procurement, while circulation channels for non-invoiced scrap narrowed significantly. Individual traders stockpiled and held back from selling due to cumbersome invoicing procedures, causing available spot scrap tungsten to tighten on a periodic basis, directly driving recent scrap quotations to rise in tandem with primary tungsten. However, speculative price-boosting sentiment in the market was relatively strong, with many small and medium-sized recyclers following the trend to restock and stockpile, further accumulating risks of inventory depreciation.

Overall, upstream tungsten raw material transactions were active, and with improving industry demand, the sector was likely to maintain a rebound-dominated trend on a periodic basis. In the short term, the core market driver remained anchored in the dual tailwinds of supply-side contraction and end-user restocking. Flooding season disruptions in major producing areas continued to suppress ore output, compounded by the scrap supply gap caused by tightened invoicing policies for recycled tungsten, which firmly underpinned the sustained tungsten price rebound. In the medium and long term, the tungsten market faced a tug-of-war between longs and shorts, and resistance to a sustained one-directional rise remained. On one hand, after this round of consecutive increases, upstream suppliers' profit margins continued to expand, and if demand follow-through weakened later, there was a risk of concentrated selling and price correction. On the other hand, downstream cost pass-through lagged, and small and medium-sized cemented carbide and deep-processing enterprises had limited acceptance of high-priced raw materials, maintaining only rigid-demand small-lot procurement without broad-based excess restocking, and the sustainability of end-use demand remained to be verified. Meanwhile, risks from high-level stockpiling in the scrap tungsten market were prominent, as small and medium-sized recyclers following the trend to stockpile drove inventory pressure to climb. Once policies loosened or end-user order-taking weakened, scrap prices could pull back rapidly, in turn dragging down primary tungsten prices. Going forward, close tracking is recommended on tax policy adjustments in Jiangxi and Hunan, the June 5 industry long-term contract pricing, and changes in end-user orders, so as to adjust procurement and sales pace in a timely manner.