SMM July 21 News:
Entering late July, the Chinese tungsten market has entered a phase of consolidating at lows and repairing. After tungsten prices experienced a sustained deep pullback in the prior period, low-priced cargo became hard to find. Upstream mines and holding traders held back from selling and showed a strong willingness to hold prices firm, while the center of spot order transaction prices moved steadily higher. Coupled with the boost to market sentiment from long-term contract purchase quotes by leading tungsten enterprises, trading activity at the mine and APT ends has recovered somewhat. However, constrained by the traditional consumption off-season, downstream end-use demand has yet to visibly recover, leaving the overall market structurally divided, with upstream raw material prices rebounding on firm offers while downstream demand remains persistently weak.
A tungsten enterprise lowered its long-term contract purchase prices for the second half of July
A tungsten enterprise lowered its long-term contract purchase prices for the second half of July, as follows:
According to a Chongyi tungsten enterprise, its long-term contract purchase prices for the second half of July are as follows: 1. 55% wolframite concentrates: 411,000 yuan/standard tonne, down 37,000 yuan/standard tonne from the previous round; 2. 55% scheelite concentrates: 410,000 yuan/standard tonne, down 37,000 yuan/standard tonne from the previous round; 3. APT (national standard grade 0): 605,000 yuan/mt, down 55,000 yuan/mt from the previous round.
Tungsten prices stop falling and see two consecutive days of gains
Reviewing the current round of market movements, after the average price of wolframite concentrates rebounded to a previous high of 527,500 yuan/standard tonne in early-to-mid June, the market continued to weaken. The key drag was persistently sluggish end-use demand, coupled with a period of continued destocking of raw material inventories following previous concentrated stockpiling by enterprises, which significantly weakened market price support. Tungsten prices thus embarked on an overall downward correction from June 17. Compared with the average price of 527,500 yuan/standard tonne on June 16, the average of 402,500 yuan/standard tonne on July 17 represented a decline of 125,000 yuan/standard tonne, or 23.7%, in just over a month.
After the rapid pullback in tungsten prices, phased bottom support has gradually emerged for the tungsten market. Tightening upstream supply and warming sentiment to hold back from selling and hold prices firm helped tungsten prices stop falling and stabilize, and then they saw a rebound over two consecutive days. According to SMM quotes, the price of wolframite concentrates (≥65%) on July 21 was 410,000-415,000 yuan/standard tonne, with an average price of 412,500 yuan/standard tonne, up 1.23% from the previous trading day.At present, low-priced cargo is scarce in the market, and suppliers have generally stopped dumping at low prices. Combined with the fact that long-term contract purchase prices of leading tungsten enterprises are higher than mainstream spot transaction prices, market confidence has been effectively boosted, driving spot transaction prices to gradually converge toward long-term contract prices.
Outlook
In the short term, supported by tightening raw material supply and strong sentiment among suppliers to hold prices firm, the tungsten market in late July will primarily experience a slight rebound and consolidation at lows, with conditions not yet in place for a significant reversal. Any substantial recovery in the market still depends on the arrival of the traditional downstream peak consumption season from August to September, driven by a recovery in end-user orders and the release of concentrated restocking demand that pushes prices upward. Currently, the industry chain has relatively consistent expectations for a recovery in the peak season, and some enterprises may gradually begin pre-stockpiling on dips, which is expected to bring marginal improvement to tungsten market conditions.
The tungsten market is now at a critical period of stopping falling and consolidating, with the recovery concentrated in upstream raw materials. Downstream sectors such as tungsten powder and cemented carbide remain deep in the traditional consumption off-season, with stable end-user operations and scarce new orders. Enterprises generally restock only to meet rigid demand, and there are no large-scale stockpiling activities, which is insufficient to support a sharp rise in raw material prices. However, the industry chain has formed a broad consensus on a market recovery after August, and pre-stockpiling on dips is gradually increasing, which is expected to drive marginal upward movement in the industry chain's market conditions ahead of time. Markets outside China, affected by the summer holiday, are experiencing sluggish trading, with high prices but no buyers. Prices continue to consolidate at highs, the risk of a sharp decline is extremely low, and the pattern of divergence between domestic and overseas markets is expected to persist. Going forward, focus on four key variables: first, the pace of domestic mine supply release and changes in suppliers' sentiment to hold prices firm; second, the pace of downstream cemented carbide end-user operation recovery and the intensity of concentrated restocking; third, the market guidance role of APT long-term contract quotations; fourth, the volume of scrap tungsten recycling and circulation, and the downstream procurement volume of recycled raw materials.
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