PART III ANALYSIS ON THE SITUATION OF CHINA TUGNSTEN INDUSTRY 2021
3.1 Industrial Policies Ensure the Stable Running of the Industry
The Chinese government continues to implement the management principle of total amount control of tungsten mining yearly. In 2021, the total amount control index of tungsten concentrate mining was 108,000 tons, an increase of 2.86% over the previous year.
China will continue to implement “the Guiding Catalogue for industrial restructuring (2019) (NDRC No. 29)”, “the Negative List of Market Access (2019) (FGJT (2018) No. 1892)”, and the state-owned trade management policies for tungsten exports, the Ministry of Commerce issued “the Special Management Measures for Foreign Investment Access (Negative List) (2021) and the Special Management Measures for Foreign Investment Access in the Pilot Free Trade Zone (Negative List) (2021)”. The negative list of foreign investment access in 2021 puts forward that investment in tungsten exploration, mining and beneficiation is prohibited. The Ministry of Industry and Information Technology, the Ministry of Science and Tchnology and the Ministry of Natural Resources jointly issued the “ ‘14th Five-year Plan’ for the Development of Raw Material Industry (MIIT Lian GUI (2021) No. 212)”, and the NDRC issued “the Notice on the "14th Five-year Plan" for the Development of Circular Economy (FGHZ (2021) No. 969).
The above industrial policies and plans have important guiding significance for the tungsten industry and effectively ensure the smooth operation of the tungsten industry.
3.2 Tungsten Industrial Structure Optimization Continuously
The level of technological equipment of tungsten industrial of China has been gradually raised to the international level. The automation and intelligent construction of tungsten mines have been gradually started, and the smelting process have made a breakthrough in green environmental protection and energy saving. The advanced equipment such as Automatic 15-Tube Tungsten Reduction Furnace, molybdenum wire carbonization furnace, fully automatic hydraulic press and multi atmosphere tungsten cemented carbide pressure sintering furnace have been basically popularized, and the manufacturing equipment and coating equipment of hard alloy cutting tools have reached the international advanced level. The market share of high-end products has gradually increased. High light tungsten cemented carbide such as nano，ultra-fine cemented carbide, fine grain size , medium grain, coarse grain and ultra coarse grain tungsten cemented carbide, coating cemented carbide, net micro structure tungsten cemented carbide and gradient structure tungsten cemented carbide have been industrialized, and CNC blades have achieved leapfrog development. In 2021, the output of CNC blades exceeded 450 million pieces, and significant progress has been made in category and quality, basically meeting the needs of the national economy, defense and military industries for CNC blades, especially, the annual output of Zhuzhou Cemented Carbide set a record and took the lead in breaking through 100 million pieces. The tungsten products’ structure of China has been continuously improved, the proportion of tungsten cemented carbide and other deep-processing products has increased, and the export volume proportion of high-tech products has gradually increased.
3.3 The Macroeconomic & Microeconomic Factors are More Complex
The global epidemic continues, the momentum of world economic recovery is insufficient, commodity prices fluctuate at a high level, and the external environment is becoming more complex, severe and uncertain. China's economic development faces the triple pressure of shrinking demand, supply shock and weakening expectation. Local outbreaks occur from time to time. The recovery of consumption and investment is slowing, it is more difficult to stabilize exports, the supply of energy and raw materials is still tight, the production and operation of small, medium-sized and micro enterprises and individual industrial and commercial households are difficult, and the task of stabilizing employment is even more arduous. The ability to support innovation in key areas is not strong. In some places, the contradiction between fiscal revenue and expenditure has increased, and there are many hidden risks in the economic and financial field. Then, tungsten industry faces more severe challenges.
3.3.1 The Operation Cost of Tungsten Industry is Higher
In 2021, influenced by the global COVID-19, liquidity flooding, supply bottlenecks and other factors, bulk commodities price will remain at a high level. This has dragged down the recovery of the global economy, especially squeezing the profit margins of final tungsten and its carbide, alloy manufacturing enterprises. Since 2022, affected by international risk events, the prices of crude oil and natural gas have continued to rise, posing a challenge to the domestic work of ensuring supply and stabilizing prices, and the tungsten industry is facing the pressure of high operating costs.
3.3.2 The Supply & Demand of Tungsten has Turned into a Weak Balance
In 2021, China's epidemic prevention and control was effective, making the economy take the lead in global recovery, with GDP growth of 8.1%, higher than in recent years, and domestic tungsten consumption and export achieved related reasonable growth. Combined with the domestic and international economic environment, the expected GDP target in 2022 is about 5.5%, and the growth of China's tungsten consumption and export is expected to slow down. The trend of China's tungsten consumption in recent five years is shown in Figure 13.
In terms of supply, the global supply of tungsten concentrate is expected to increase gradually. Some foreign tungsten mines have been shut down due to the market downturn in the past period of time. At present, the progress of tungsten mine projects under construction or reconstruction is slow, and some projects with new production capacity originally planned to be put into operation in 2021 have not been put into operation as scheduled.
The tungsten project continues to be promoted, and it is expected that new tungsten production capacity will be put into operation in the next two years. The technological transformation and capacity expansion of some domestic tungsten mines will gradually and steadily release the new production capacity; The production of some mines is reduced due to the decline of grade, and some mines are shut down for a long time due to ecological red line, resource depletion, low efficiency and other factors.
Russia is the second largest tungsten resource country in the world, and also a country that developed and processed tungsten products earlier. China's earliest tungsten products finishing came from the technical assistance of the former Soviet Union. Now, the turbulence of resource remediation and the instability of the world economy caused by the conflict between Russia and Ukraine have brought great uncertainties to the tungsten products industry. For the significant impact of the conflict between Russia and Ukraine on the price and market of China's tungsten products, you can visit China Tungsten online website to read detailed analysis and reports.
In terms of demand, internationally, regional conflicts have led to abnormal increases in the prices of energy, food and some metals, sanctions have led to supply chain interruption, market chaos or short-term price fluctuations of tungsten products, and demand uncertainty has increased. China still maintains its position as a global manufacturing power, continues to promote industrial transformation and upgrading, has a good momentum of new energy and new infrastructure, and the demand for tungsten is growing continuously. The layout of China's tungsten industry has been gradually optimized, the coordinated development of tungsten industry chain and regions has been gradually promoted, the new advantages of international competition have been continuously improved, and the ability to provide industrial supporting services has been gradually strengthened.
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