Core view
1. Since April 2020, tungsten prices have continued to strengthen. As of March 25, 2022, the price of tungsten concentrate in China has been reported at 119500 yuan / ton, an increase of 28.5% over the same period last year and 61.5% over the low level in 2020; The price of ammonium paratungstate (APT) in China was reported at 181000 yuan / ton, an increase of 28.8% over the same period last year and 57.4% over the low level in 2020; The price of tungsten carbide in China reached 274 yuan / kg, an increase of 26.3% over the same period last year and 47.3% over the low level in 2020. The supply of tungsten concentrate is limited, and the production cost of apt continues to increase. In terms of tungsten concentrate, according to the data of the Ministry of natural resources, the mining quota of tungsten concentrate in 2021 is 108000 tons, a slight increase of 2.9% compared with 105000 tons in 2020. With the large volume of apt, the policy influence of the upstream of the industrial chain gradually appears, and the production cost of apt continues to increase. According to the data of Baichuan Yingfu, as of March 25, 2022, the price of tungsten concentrate was 119500 yuan / ton, an increase of 28.5% over the same period last year, and the production cost of apt was 180000 yuan / ton, an increase of 29.5% over the same period last year. The downstream consumption continues to increase, and the demand of the terminal industry is large. Apt is the core raw material of tungsten industry chain, which is mainly used to produce tungsten carbide. The downstream demand of tungsten carbide is mainly cemented carbide, accounting for 93% of its total demand, while the consumption terminal of cemented carbide is mainly metal cutting machine tools. According to the data of the National Bureau of statistics, in 2021, the cumulative output of metal cutting machine tools reached 602000, with a year-on-year increase of 35.0%. According to the data of Baichuan Yingfu, the consumption of tungsten carbide in cemented carbide in 2021 was 51000 tons, an increase of 30.6% over the same period last year. The upstream is limited and the downstream is large, and the tungsten price is expected to continue to grow. In terms of supply, the supply of raw material tungsten concentrate is affected by the policy quota, and the annual output is limited. In terms of demand, the increase in the output of China’s metal cutting machine tools promotes the growth of cemented carbide demand, and the demand for tungsten continues to increase. With the limited upstream supply and large downstream demand, the price of tungsten is expected to rise further in the future.
\u3000\u30002. In the past week, most of the prices of major non-ferrous metals rose, including zinc up 3.3% and neodymium oxide down 7.5%. In terms of zinc, as of March 25, 2022, the market price of China’s SHFE zinc reported 348000 yuan / ton, up 3.3% week on week. The main reasons for the rise of zinc prices in China are the continuous conflict between Russia and Ukraine, the sharp rise of natural gas prices in Europe and the rise of zinc smelting costs; In terms of neodymium oxide, as of March 25, 2022, neodymium oxide reported 1045000 yuan / ton, down 7.5% week on week. The main reason for the decline of neodymium oxide is the weak demand for neodymium oxide due to downstream on-demand procurement.
\u3000\u30003. The Central Bank of Russia announced the purchase of gold, and the gold price fluctuated upward. In terms of gold price, as of March 25, 2022, Comex gold futures closed at US $1957.6/oz, up 1.9% on a weekly basis China National Gold Group Gold Jewellery Co.Ltd(600916) futures prices reported 402.2 yuan / gram, up 1.3% on a weekly basis. In terms of news, according to the news of China Central Television, the demand of Russian residents for gold has increased recently. On March 25 local time, the Russian Central Bank announced that it would buy gold at a fixed price in the internal market from March 28.
\u3000\u30004. Market review. In the past week, six of CITIC’s nonferrous metal sub sectors rose and three fell. Among them, the gold sector rose 9.1%; The top three sectors were rare earth and magnetic materials, copper and tungsten, with declines of 2.3%, 0.7% and 0.5% respectively. In terms of individual stocks, the top three weekly gains were Jinzhou Jixiang Molybdenum Co.Ltd(603399) , Yantai Yuancheng Gold Co.Ltd(600766) , Yintai Gold Co.Ltd(000975) , with weekly gains of 40.9%, 22.2% and 19.3% respectively; The top three weekly declines were Shenzhen Sunxing Light Alloys Materials Co.Ltd(603978) , Hoshine Silicon Industry Co.Ltd(603260) , Sichuan Anning Iron And Titanium Co.Ltd(002978) , with weekly declines of 9.9%, 8.6% and 6.9% respectively.
Investment advice
Tungsten prices continue to run at a high level, and relevant production enterprises in the tungsten industry may benefit, such as China Molybdenum Co.Ltd(603993) , Xiamen Tungsten Co.Ltd(600549) , China Tungsten And Hightech Materials Co.Ltd(000657) , etc.
Risk tips
The geopolitical conflict intensified, the production and sales of metal cutting machine tools were less than expected, and the policies related to tungsten concentrate were relaxed.
