Demand for downstream photovoltaic tungsten wire, hard alloy, etc. is growing steadily, and the conflict between supply and demand for tungsten resources is becoming more and more prominent.
The Zhitong Finance App learned that Huaan Securities released a research report saying that in the context of total volume control, China's tungsten ore faces problems such as declining grade and rising costs. Furthermore, there is great uncertainty about the commissioning time of potential projects at home and abroad. At the same time, demand for downstream photovoltaic tungsten wire, hard alloy, etc. is growing steadily, and the conflict between supply and demand for tungsten resources is becoming more and more prominent. The focus is on recommending high-quality companies with a perfect industrial chain layout and technical and cost advantages. It is recommended to focus on Xiamen Tungsten Industry (600549.SH) (photovoltaic tungsten wire release), Chinatungsten Hi-Tech (000657.SZ) (persimmon), Zhangyuan Tungsten (002378.SZ), and Xianglu Tungsten (002842.SZ).
The views of Huaan Securities are as follows:
Tungsten Alloys — Industrial Teeth, a Scarce Strategic Resource
Tungsten is an extremely scarce and irreplaceable strategic resource. It has properties such as high melting point, high hardness, high density, good electrical and thermal conductivity, and a small expansion coefficient. Hard alloys made of tungsten are known as “industrial teeth” and are widely used in military, aerospace, machining, metallurgy, drilling, mining tools, electronic communications, construction, etc. And tungsten wire is a key material for lighting, electronics, photovoltaics and other industries.
Supply side: China plays a leading role in global tungsten supply
Global tungsten deposits are widely distributed, but mineralization is relatively concentrated, and tungsten ore reserves and production are concentrated in a few countries. According to USGS statistics, the world is rich in tungsten resources. In 2022, global tungsten resource reserves reached 3.8 million tons. China is the country with the richest tungsten ore reserves and production in the world. Among them, tungsten ore accounts for nearly half of its reserves and more than 80% of production. Under the constraints of total volume indicators, disorderly mining of tungsten concentrate has been controlled, and production is decreasing year by year: China accounts for far more tungsten production than reserves, and consumes tungsten resources too fast. In particular, high-grade black tungsten ore, which is easy to mine, may face the problem of rapidly increasing mining costs. It is expected that the country's total tungsten mining volume will continue to narrow in the future.
Long-term supply outlook: primary ore supply is tight, and regenerated tungsten has huge potential
Primary mining side: China's tungsten ore faces the problem of “four more than one low”. Long-term resource advantage or weakening, mining side supply is tight for a long time: Judging from proven tungsten ore resources, China's tungsten resource situation shows the characteristics of “four plus one low”, that is, there are many white tungsten ores, many poor minerals, many co-occurring ores, many difficult to select minerals, and a low level of comprehensive resource utilization. In addition to this, China's tungsten mines still have problems of aging and small scale advantages, and there is great uncertainty about when potential tungsten ore projects at home and abroad will be put into operation. Recycled tungsten: There is great potential for secondary recycling of tungsten resources, and the use of recycled tungsten has great economic benefits.
Demand side: Focus on increases in hard alloys, photovoltaic tungsten wire, military industry, etc.
Global consumption of tungsten is mainly concentrated in China, Europe, the United States and Japan, and China consumes nearly half. 1) Hard alloy: About 60% of the downstream tungsten is used in hard alloys, of which 45% of hard alloy is used for cutting tools and 30% of hard alloy is used for mining and wear-resistant tools. High-end and import substitution will provide domestic hard alloy tool companies with broad development space. 2) Photovoltaic tungsten wire: In the context of the long-term photovoltaic boom cycle, the path for photovoltaic fine tungsten wire to replace steel wire diamond wire is clear, providing a new direction for the downstream application of tungsten with high added value.
Risk warning: tungsten concentrate prices fluctuate greatly, downstream demand growth falls short of expectations, industry competition intensifies, etc.