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Overview
In 2015, the global economy has experienced the most complex year with all kinds of potential risks interwoven. The European Central Bank adopted a policy of quantitative easing, which led to the Euro constantly depreciating. The American economy has shown weakness in terms of growth and emerging economies in Asia have seen a slowdown in the pace of economic growth. Commodity prices have been on a downward trend in general due to the sluggish global economy and the Chinese tungsten market has been no exception. Prices for tungsten have shifted downward due to poor demand from end users.
The Chinese tungsten market has continued to show a weak trend with no improvement in terms of demand from end-users being seen since the second half of 2014. Prices kept falling until they dropped below cost lines. However, affected by news of the national reserve and moves by key producers to suspend production in a bid to keep prices from falling further, tungsten concentrate prices bottomed out and were soaring at the end of 2015. Although prices for APT and tungsten powder have risen accordingly, selling prices for smelting products are still lower than the purchase prices due to the low level of consumption from the downstream hard alloy sector and thus smelting and processing enterprises are having a hard time. Furthermore, overseas consumers continue to postpone replenishments with a strong wait-and-see attitude regarding the market outlook, resulting in a stagnating situation in the export market for tungsten products.
As a major global supplier of tungsten resources, China still contributes more than 70% of the world’s supply of tungsten raw material. However, after experiencing a price roller coaster with all the rises and falls over the past few years, many overseas consumers have started to actively expand their supply channels for raw material, develop foreign mines and establish tungsten scrap recycling companies. Meanwhile, many Chinese enterprises have turned to investing in overseas markets due to the decreasing grade of competitive mines and increasing cost of environmental protection and labor management, so tungsten-rich regions such as Africa, Northeast Asia and South America will become the key investment areas for new tungsten mines in the future.
Faced with sluggish demand from end users, how do China’s tungsten product enterprises find a way out of a difficult situation? Will prices for tungsten concentrate and APT see another record high? How does one drive export prices for tungsten up while foreign consumers stand pessimistically on the sidelines? What changes can we expect regarding the worldwide supply pattern for tungsten in the future?