Analysis of China's tungsten and molybdenum price trend and market prospect in 2017


1. Molybdenum: China has abundant reserves accounting for 40% of the world's total, mainly used for steel

The world is rich in molybdenum resources. According to statistics, the reserves of molybdenum metal resources in the world are about 10 million tons, mainly distributed in China and the Americas. The top four reserve countries, China, the United States, Chile and Peru, account for 86% of the world's reserves, which are relatively concentrated, while China's reserves account for 43% of the world's reserves. China's molybdenum resources are mainly distributed in Henan, Shaanxi, Jilin and other regions. The resource reserves of the three provinces account for 80% of China's total reserves, of which Henan is the most abundant, accounting for 40% of domestic reserves.

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In recent years, the global molybdenum output is relatively stable, maintained at about 240000 tons/year, and the production is relatively concentrated. The output of the top five producers is close to 50% of the global output. In 2015, the global molybdenum metal output was 246000 tons, and China's output was 84000 tons, accounting for more than 30% of the global output. However, with the decline of the prosperity of the steel industry and the decline of the growth rate of the global crude steel output, the molybdenum supply has been in a state of surplus. In 2015, the global molybdenum consumption was 217000 tons, the output was surplus 30000 tons, the domestic molybdenum consumption was about 60000 tons, and the output was surplus 20000 tons.

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In terms of molybdenum consumption, about 75% of the world's molybdenum products are used in the steel industry in the form of molybdenum furnace charge such as molybdenum oxide or ferromolybdenum, while the other 25% are used in molybdenum chemical industry, molybdenum metal products and other industries. The consumption fields of molybdenum include construction engineering, machinery manufacturing, automobile, shipbuilding, aircraft, petroleum pipeline and drilling platform, as well as the production of catalyst, pigment, lubricant and other chemical products. In most of the above application fields, molybdenum has no direct substitutes. Therefore, molybdenum consumption is highly correlated with global crude steel production.

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2. Tungsten: national strategic resource, mainly used for cemented carbide

According to statistics, the world's proven tungsten reserves are about 3.1 million tons, mainly distributed in China. China's proven reserves are 1.9 million tons, accounting for about 61% of the world's reserves. China's tungsten resources are mainly distributed in Hunan, Jiangxi, Henan and other places, of which Hunan's reserves account for 45% of China's largest.. In China's tungsten resources, the proven scheelite reserves account for about 70% of the total tungsten reserves in the country, mainly including Chenzhou Shizhuyuan tungsten tin bismuth molybdenum polymetallic ore, Luanchuan Sandaozhuang molybdenum tungsten ore and Chenzhou Xintianling tungsten tin bismuth molybdenum polymetallic ore; The proven reserves of wolframite account for about 29% of the total tungsten reserves in China.

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Due to its high melting point, high hardness, high density, good conductivity and thermal conductivity and other physical properties, tungsten is widely used in military industry, aerospace, machining, metallurgy, oil drilling, mining tools, electronic communications and other fields. It is an irreplaceable strategic metal in the national economy and modern national defense. From the perspective of consumption structure, tungsten is mainly used to produce cemented carbide, tungsten steel, tungsten materials, etc. In developed countries, most of tungsten is used in cemented carbide, accounting for 72% of total tungsten consumption.

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It is shown that there are 27 tungsten mines in the world, with a tungsten concentrate capacity of 113000 tons, including 80000 tons in China. In 2015, China's tungsten concentrate output was 72000 tons, and the global tungsten concentrate output was 85000 tons. China's output accounts for about 84% of the global output (equivalent to 100% WO 3). The main domestic tungsten producers are Jiangxi Tungsten Industry Group Co., Ltd., Luoyang Molybdenum Industry, Jiangxi Rare Earth Metal Tungsten Industry Group Co., Ltd., etc. As tungsten is a strategic resource, The state began to control the total amount of tungsten production in 2002. In terms of consumption, global tungsten consumption is mainly concentrated in China, Europe, the United States and Japan. In 2015, China's tungsten consumption was 34000 tons, accounting for about 50% of the global tungsten consumption. In recent years, due to the weak global economic recovery, the overall growth of global tungsten consumption is slowing down.

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3. Tungsten and molybdenum are at the bottom of the price and are expected to rebound

With the continuous downturn of the domestic and international economic situation, the falling crude oil price and the recession of the manufacturing industry, the domestic and international steel prices have intensified the decline, and the demand for molybdenum containing steel has declined sharply. In addition, the continuous production of new molybdenum mines at home and abroad has led to the continuous increase in the supply of molybdenum industry and the intensification of overcapacity. Therefore, since the financial crisis in 2008, the price of molybdenum has been falling all the way down to the lowest point of 680 yuan/ton in ten years by 2015.

Molybdenum fell below the cost line and the price was supported. The statistics of molybdenum production and consumption show that the oversupply of molybdenum market is still increasing; Moreover, because the molybdenum price has been operating at a low level for a long time, the proportion of low-cost by-product molybdenum in the molybdenum supply structure continues to increase, which brings greater pressure on the recovery of molybdenum price. However, in 2015, the molybdenum concentrate dropped to 680 yuan/ton as a minimum, and the annual average price was 960 yuan/ton, which fell below the cost line of domestic major molybdenum mines for the first time in recent 12 years. We believe that the molybdenum price will be supported and the downward space is limited.

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The price of tungsten is expected to rebound after the combination of national storage and industrial production reduction. The tungsten price is currently at the bottom. In order to maintain the stability of tungsten price this year, the country plans to purchase and store 10000 tons of tungsten concentrate, and the price may exceed 73000 yuan/ton. In 2016, China's tungsten industry will also plan to jointly reduce its output. The output of tungsten concentrate will decrease by 15% year on year, and the output of key key enterprises will decrease by 10000 tons in total. With the combination of national storage and industrial production reduction, the supply side will be effectively controlled, and the tungsten price will gradually rebound.