SMM December 30
The tungsten market experienced a weak consolidation this week. As the holiday approached, trading volume in the tungsten market declined. Additionally, some suppliers in sectors like tungsten scrap increased their need for cash realization, leading to weak transaction prices. On December 29, a mine in Guangdong tendered to sell 20% tungsten concentrate, with a reserve price of 442,000 yuan per metric ton unit, but the tender ultimately failed. Wait-and-see sentiment prevailed in the tungsten market. Transactions in the mine and APT segments showed slight loosening compared to earlier periods. Quotations in the powder market shifted from considerable fluctuations to a more concentrated range. Compared to the upstream market, prices of cemented carbide products remained stable. Enterprise costs stayed high, and the recent decline in the raw material market did not trigger significant price reductions from enterprises. Overseas markets were closed, resulting in fewer inquiries and offers.
Mine Side: As of December 30, SMM's black tungsten concentrate (65%) closed at 453,000-454,000 yuan per metric ton unit, down 5,000 yuan per metric ton unit from the previous trading day. Trading in the tungsten ore market was weak during the week, with downstream participants mainly restocking based on rigid demand amid strong wait-and-see sentiment. As the new year approaches, mines are expected to maintain stable shipments in Q1. However, long-term contracts account for a high proportion of mainstream mine sales, and the first batch of quotas remains unknown. Thus, significant selling pressure is not expected in the market for the time being.
Ammonium Paratungstate (APT): As of now, SMM's quotation for ammonium paratungstate (≥88.5%) is 660,000-680,000 yuan per metric ton, down 5,000 yuan per metric ton from the previous trading day. According to SMM survey information, domestic APT operating rates decreased significantly in December. This was mainly due to maintenance at several enterprises in Hunan and Jiangxi during the month, as well as production cuts at some enterprises in Henan due to environmental protection reasons. Domestic APT production in December decreased by approximately 10% MoM, indicating a significant industry contraction. This explains why APT led the gains strongly throughout the industry chain in December. As of now, overall circulation in the domestic APT market remains relatively tight, although transaction prices have shown slight loosening recently due to some traders offering discounts for cash realization.
As of today, tungsten carbide closed at 1,030-1,050 yuan per kilogram, flat from the previous trading day but down 20 yuan per kilogram from last Friday. Tungsten powder prices were concentrated at 1,070-1,100 yuan per kilogram, flat from the previous trading day but down 20 yuan per kilogram from last Friday. Powder enterprises face significant raw material cost pressure, leading most to maintain stable quotations. Downstream cemented carbide enterprises exhibit strong wait-and-see sentiment and poor procurement enthusiasm.
Ferrotungsten: The ferrotungsten market overall performed weakly and steadily this week. Steel mill procurement orders were scarce. In December, industry operating rates were suppressed by high costs and weak demand, leading to a MoM decrease. Today, the mainstream quotation for 80% ferrotungsten is concentrated at 665,000 yuan per metric ton, flat from the previous trading day. Overseas markets were closed. It is expected to follow the gains in the domestic market after the holiday.
Scrap Tungsten: During this period, the scrap tungsten market sentiment is divided, with recyclers pushing for lower prices, leading to significant fluctuations in transaction prices. As suppliers clear their inventories, the decline in scrap tungsten prices has slowed slightly this week. Today, SMM scrap tungsten rods closed at 692 yuan/kg, down 15 yuan/kg from last Friday, and other scrap tungsten products, including scrap tungsten alloy blades, have also fallen by 10-20 yuan/kg.
In the short term, domestic tungsten market transactions are shrinking before the holiday, with a strong wait-and-see sentiment among downstream players and low enthusiasm for restocking. It is expected that the tungsten market will remain in the doldrums before the holiday, and attention should be paid to the guidance of long-term contract prices and market transaction conditions after the holiday. In the medium and long-term, domestic mines will gradually release goods in Q1, but downstream sectors will also enter a new round of restocking cycles. Before the first batch of quotas is issued, it is unlikely that mines will overproduce or oversell, and they will mostly maintain stable shipments. The supply of tungsten ore is not expected to become loose, and there has been no concentrated maintenance reported for APT so far, indicating steady demand support from the mine end. Additionally, as the pre-Chinese New Year stockpiling season approaches, the demand for tungsten ore is still expected to increase. Meanwhile, some enterprises have recently provided feedback on the substitution of tungsten-based cutting tools with other materials. Currently, the main types of cutting materials in the market include high-speed steel (HSS) tools, cemented carbide tools, ceramic tools, CBN (cubic boron nitride) tools, and PCD (polycrystalline diamond) tools. From a cost-effectiveness perspective, HSS tools currently have a price advantage to replace tungsten-based cemented carbide materials, but HSS tools are more suitable for small-batch, medium to low-speed processing scenarios and cannot adapt to many high-speed processing environments, limiting their large-scale substitution. Other products, although capable of replacing cemented carbide in some applications, are more expensive than cemented carbide. From the end-user's perspective, it is difficult to find a good substitute material in the short term to replace the tungsten market share. Increasing the recycling and utilization of recycled tungsten may alleviate some of the high pressure on the raw material end, but scrap tungsten inventories are also being cleared after this round of selling. Overall, SMM expects that the tungsten market will still face tight upstream supply in Q1, driving the entire tungsten market to fluctuate at highs.
