Multiple tungsten companies raised their long-term contract prices, tungsten ore prices have increased by 31.5% over the past six months [SMM Comment]

The tight supply of tungsten ore has not yet been alleviated. Recently, Chongyi Zhangyuan Tungsten and Jiangxi Tungsten have further raised their long-term contract prices for the second half of May, while a large tungsten company in Fujian has suspended its long-term contract pricing. Since late November 2023, tungsten prices have either been rising or flat. Over the past six months, the price of black tungsten concentrates has increased by more than 30%, and the prices of ammonium paratungstate (APT), tungsten powder, tungsten carbide powder, and ferrotungsten have also risen along with raw material prices, with increases of around 30% over the past six months. According to SMM, the continuous rise in tungsten prices has made downstream procurement increasingly cautious, with the market mainly maintaining on-demand purchases.

Jiangxi Tungsten and Zhangyuan Tungsten raise long-term contract prices for the second half of May, a large tungsten company suspends quotes

Jiangxi Tungsten and Zhangyuan Tungsten continued to raise their long-term contract prices for the second half of May.

Jiangxi Tungsten Holding Group Co., Ltd.'s guidance price for national standard first-grade black tungsten concentrates for the second half of May 2024 is 156,000 yuan/mt (up 12,000 yuan/mt from the previous round).

According to the official WeChat account of Chongyi Zhangyuan Tungsten: After company research, the long-term contract purchase prices for the second half of May are as follows: 1. 55% black tungsten concentrates: 156,000 yuan/mt (up 12,500 yuan/mt from the first half of May); 2. 55% white tungsten concentrates: 155,000 yuan/mt (up 12,500 yuan/mt from the first half of May); 3. APT (national standard zero grade): 233,000 yuan/mt (up 22,000 yuan/mt from the first half of May). Note: The above prices include 13% VAT.

It is reported that a large tungsten company in Fujian has recently suspended its long-term contract quotes for this round.

Over the past six months, black tungsten concentrates have increased by 31.51%, and APT and ferrotungsten have increased by over 30%

In terms of tungsten ore raw materials: According to SMM, the continuous upward trend of the tungsten industry chain over the past six months has been mainly driven by the tight supply of upstream raw material tungsten ore. The price of black tungsten concentrates (≥65%) on May 21 was 156,000-157,000 yuan/mt, with an average price of 156,500 yuan/mt. After leaving the low point of 119,000 yuan/mt on November 16, 2023, the average price has been on an upward trend, rising by 37,500 yuan/mt to 156,500 yuan/mt as of May 21, an increase of 31.51%.

In terms of APT: APT smelters have gradually raised their price center to cope with the rapid rise in tungsten raw material costs and the relatively stable downstream demand, thereby reducing losses. On May 21, the price of APT was 230,000-233,000 yuan/mt, with an average price of 231,500 yuan/mt, up 54,000 yuan/mt from the low point of 177,500 yuan/mt on November 16, 2023, an increase of 30.42%.

In terms of tungsten powder: The price of tungsten powder on May 21 was 340-345 yuan/kg, with an average price of 342.5 yuan/kg, up 76 yuan/kg from the average low point of 266.5 yuan/kg on November 17, 2023, an increase of 28.52%.

In terms of tungsten carbide powder: As the downstream of the tungsten industry chain, the price of tungsten carbide powder on May 21 was 335-340 yuan/kg, with an average price of 337.5 yuan/kg, up 76 yuan/kg from the average low point of 261.5 yuan/kg on November 17, 2023, an increase of 29.06%.

In terms of ferrotungsten (80%): As the downstream of the tungsten industry chain, the price of ferrotungsten (80%) on May 21 was 240,000-243,000 yuan/mt, with an average price of 241,500 yuan/mt, up 60,500 yuan/mt from the average low point of 181,000 yuan/mt on November 21, 2023, an increase of 33.43%.

Outlook

In April, tungsten concentrate imports saw significant increases both MoM and YoY. According to data from the General Administration of Customs: In April 2024, China's tungsten concentrate imports were 818.03 mt, up 109.9% MoM and 106.2% YoY.

According to an SMM survey, some tungsten ore sellers conducted profit-taking operations at the beginning and middle of May, slightly improving the market circulation of raw materials. On the demand side, the high tungsten prices have led many downstream tungsten companies to maintain on-demand purchases to ensure production and delivery for long-term contracts. Due to the relatively long service life and low cutting loss rate of photovoltaic tungsten wire, which can reduce costs and increase efficiency for photovoltaic companies, the demand for tungsten in the photovoltaic sector is expected to grow.

Considering the support of long-term contract prices from tungsten companies, tungsten prices are expected to continue to rise. However, the high tungsten prices will inhibit downstream consumption demand, limiting the upward space for tungsten prices.