Market Shipments Increase, Tungsten Market Enters High-Caution Zone [SMM Tungsten Daily Review]

SMM December 24

The tungsten market's gains slowed down this week. Spot order transactions decreased at the beginning of the week, with some mines mainly shipping at high prices. The transaction center for upstream raw materials steadily moved higher. However, market sentiment diverged in the latter half of the week, downstream wait-and-see sentiment intensified, and enterprise procurement volume decreased as the year-end approached, leading to a significant drop in market trading volume. Some APT transactions still occurred mainly at high prices. By Wednesday, some suppliers chose to take profits, and mine tenders in regions like Hunan increased market shipments. However, downstream purchasing was limited, pushing the market into a cautious phase at high levels. Negotiated prices for some deals pulled back, driving market sentiment lower.

Ore side: As of December 24, SMM black tungsten concentrate (65%) closed at 460,000-461,000 yuan per metric ton unit, up 2,000 yuan per metric ton unit from the previous trading day, with a cumulative increase of 121,000 yuan per metric ton unit within the month. Some suppliers were active in shipping this week, but mostly low-grade ore; supply of high-grade ore remained tight. Today, a Hunan-based miner tendered 70 metric ton units of 14-17% tungsten concentrate, with the final transaction price at 450,700 yuan per metric ton unit. Downstream purchasing enthusiasm was moderate, with smelters restocking mainly for rigid demand.

Ammonium paratungstate (APT): Today, SMM ammonium paratungstate (≥88.5%) was quoted at 680,000-690,000 yuan per metric ton, up 5,000 yuan per metric ton from the previous trading day, with a cumulative increase of 190,000 yuan per metric ton within the month. APT industry operating rates were low, making restocking difficult. Tight APT supply was a major driver of this tungsten market rally. As of now, enterprises under maintenance have not fully resumed production, and APT output has not seen significant increases. However, inventories held by some traders and other enterprises existed. Approaching the year-end, enterprises' need for cash increased, leading to higher shipments, which somewhat alleviated the tight supply. Negotiated prices for some spot orders were lower than previous transaction prices. Subsequent market trading sentiment still requires monitoring.

Powder product prices were raised significantly this week. On one hand, enterprise raw material inventories were low, and with strong bullish sentiment in the market, enterprises worried about potential losses on future orders, leading them to raise quotes for shipments. Additionally, some powder enterprises were still fulfilling previous orders, leaving limited volume available for export, exacerbating tight supply in the powder sector and stimulating higher transaction prices. As of today, tungsten carbide closed at 1,050-1,070 yuan per kilogram, and tungsten powder prices were concentrated at 1,090-1,120 yuan per kilogram, up 300 yuan per kilogram from the beginning of the month. Downstream carbide enterprises restocked mainly for rigid demand.

Ferrotungsten: Market trading was sluggish. Ferrotungsten enterprises raised prices mainly following cost increases. The industry showed clear supply-demand weakness. Today, the mainstream quotation for 70% ferrotungsten was concentrated at 650,000 yuan per metric ton, up 5,000 yuan per metric ton from the previous trading day. The FOB quotation was $127 per kilogram of tungsten. The European market was closed for the holiday, leaving significant potential for a catch-up rally after the holiday.

Scrap Tungsten: Market prices fluctuated at highs, with scrap tungsten enterprises trading cautiously. Some recyclers were deterred by high prices and accelerated their sales pace. Overall transaction prices remained relatively strong. Today, SMM scrap tungsten rods closed at 635 yuan/kg, up 10 yuan/kg from the previous trading day, and accumulated a gain of 165 yuan/kg within the month.

Short term, from a broader supply-demand structure perspective, the supply-demand imbalance for tungsten has not seen significant changes. However, considering periodic supply-demand shifts, approaching year-end, various segments of the tungsten industry chain face pressure to recoup funds, leading to increased demand for cash conversion. Coupled with high and fluctuating tungsten market prices, this prompted some suppliers to realize profits and exit before the holiday, resulting in some improvement in market trading volume. The possibility exists that some enterprises may choose to offer discounts to sell, potentially putting the overall highly tense industry chain under pressure. Short term, with expectations of weakening demand towards year-end, the tungsten market has entered a phase of high consolidation and heightened caution. Subsequent attention should be paid to market trading sentiment and changes in the operating rates of mainstream enterprises.