Review of the Domestic Tungsten Market in June

SHANGHAI, Jun 30 (SMM) -

In June, under the influence of the weak terminal demand for wear-resistant parts, structural parts and cutting tools, the tungsten market remained weak and the prices still moved in a downward trend.
(1) On the supply side, the middle and upstream enterprises of the tungsten industry are mainly located in Jiangxi and Hunan provinces, which have been less affected by the pandemic in the past one or two months. As the mining supply of tungsten raw materials was stable, APT spot supply was sufficient in the first half of June. In the second half of the month, the continuous rainy weather in the southern region had a certain impact on the mining in some areas and the operating rates of smelters. In addition, some smelters carried out equipment maintenance, leading to the average operating rate of the market remaining at 80-90%. As the downstream demand was low or may even further reduce, in addition to maintaining production and sales of long-term order, the supply wa short at smelters with less spot inventory. The operating rate of downstream producers maintained at 50-60%, and most of them produced on-demand.

(2) On the demand side, as a member of the minor metal, the demand for tungsten was not bullish amid the slowing global economic growth. Holders of the powder end have lowered the prices in order to sell goods, but with little sales. Under the impact of the reduction in the terminal demand and consumption of products such as cemented carbide and high-density alloys, the transactions were modest amid the muted market. 

(3) In terms of the inventory, the mining of enterprises has always been stable. But when prices dropped and the mining cost increased, holders were unwilling to sell goods. Therefore, the raw material inventory of tungsten at the mining enterprises was full. Most of the holders have sold all the inventory, and the existing stock of tungsten raw materials accounts for a small market share. APT smelters guaranteed the supply of long-term orders, and the spot inventory was low. The raw material inventory at the powder end was more than 50%.

To sum up, the supply of raw materials in the middle and upstream enterprises of the tungsten market was sufficient in June, while the downstream demand moved in a downward trend. Tungsten prices were supported by the high mining costs and the increase in the prices of auxiliary materials. The prices of upstream tungsten products were stagnated. In July, the tungsten market is about to enter the seasonal low. The maintenance of steel mills and the summer vacation of overseas companies will reduce the demand for tungsten, which may further drag down tungsten prices. SMM expects that domestic tungsten prices will maintain a downward trend in July.