Viewpoint: China tungsten prices to rise in 2021

: Metals
21/01/07

Chinese tungsten prices are expected to rise steadily in 2021 on expectations of a recovery in the global economy and as production cuts take effect.

The International Monetary Fund (IMF) predicts that global economic growth in 2020 will fall by 4.4pc from 2019 but will rebound by 5.2pc in this year. China's economic growth is forecasted to be 1.9pc in 2020, rising to 8.2pc this year.

The global economy is likely to recover from the 2020 slowdown if the Covid-19 pandemic is brought under control following the worldwide vaccine rollout. The US has already started distributing the Pfizer-BioNTech vaccine after receiving authorisation for its emergency use from the Food and Drug Administration.

This could support the tungsten market because consumption is closely linked to the global economy's development, as tungsten carbide, alloy and chemicals are widely used in the construction, electronics, mining, automotive and petrochemical industries.

China consumption on the rise

New infrastructure builds, security projects and 5G plans in China are expected to support the manufacturing industry, tungsten's key downstream sector, which is likely to see continued growth in 2021.

China's PMI index rose to 52.1pc in November 2020, up from 50.2pc a year earlier and by 0.7pc from 51.4pc in October, according to the national bureau of statistics. The index has been above 50pc — the critical point — for nine consecutive months, indicating that recovery in the manufacturing industry has accelerated.

In November, China sold 32,236 excavators, the main downstream device for tungsten carbide, up by 66.9pc from 2019. Of this, 28,833 excavators were sold in China, up by 68pc, with the remaining 3,403 exported, a rise of 28.8pc on the same period in 2019, according to statistics released by the country's construction machinery association.

A global economic rebound this year is likely to drive sales of excavators higher, underpinning tungsten demand.

Furthermore, China's vehicle sales and production rose for an eighth consecutive month in November on sustained demand, supported by government policies and a seasonal pick-up in sales during the mid-autumn and National Day holidays. This indicates steady use of tungsten in the automotive industry.

Total sales in 2020 are likely to reach 25mn, down by around 2pc on the year, but beating initial expectations, according to the association of automobile manufacturers. The government will take more measures to boost automotive sales as part of China's initiative to expand domestic demand after the pandemic.

Vaccination programmes are expected to support the reopening of borders and boost the demand for civil aerospace products, which could lift demand for high density tungsten alloys.

But consumption outside China remains under pressure. Combined exports of tungsten products in January-October dropped by 32pc to 12,979t (metal content) from a year earlier, as a second wave of Covid-19 restrained production and demand for metal feedstock across the rest of the world.

Shipments to major countries and regions, including the US, Japan, Europe and South Korea, fell by 36pc, 40pc, 36pc and 15pc, respectively. Demand from these countries in 2021 is likely to rebound as vaccine programmes bring the coronavirus under control.

High production costs, stable output

Tungsten concentrate production costs remained high as China's high-grade tungsten and easy-to-mine concentrate dried up after years of mining activity. Furthermore, anti-pollution policies required upgraded equipment, which increased costs.

The average production cost for concentrate is around 80,000 yuan/t, according to market participants. Slim profit margins pushed concentrate producers to scale back sales and hold offer prices firm throughout 2020.

China produced 111,831t of tungsten concentrate containing 65pc tungsten trioxide in January-October, down by 2.25pc from 114,407t in the same period of 2019, data from the China nonferrous metals industry association show.

Concentrate production this year is predicted to hold stable as the Chinese government requires large producers to arrange production in line with the mining quota policy.

Unprofitable prices for intermediate product ammonium paratungstate have pushed producers in Jiangxi and Hunan province to halve or halt production since August last year, relieving the oversupply situation and underpinning prices in the future.

By Beijing staff

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24/12/27

Viewpoint: Indian FeCr to face pressure in 1Q 2025

Mumbai, 27 December (Argus) — India's ferro-chrome market is expected to remain under pressure in the first quarter because of muted spot demand as a result of sluggish stainless steel consumption. Producers will likely keep ferro-chrome output low in the coming months. The market is widely expected to remain sluggish until after the lunar new year holiday in February. There is little to no optimism that spot liquidity and supplier profit margins will increase in the short term, because demand from the stainless steel industry is weak. Prices for Indian high-carbon ferro-chrome 60pc fluctuated significantly in 2024. Prices hit a high of 120,000-121,000 rupees/t ($1,400-1,415/t) ex-works on 21 February, bolstered by tight ore availability and rising feedstock costs. But weak demand for stainless steel, both locally and globally, kept many market participants on the sidelines, causing prices to fall sharply in April-August, reaching Rs102,000-104,000/t ex-works on 20 August. Prices have since remained around this level, with the Argus assessment on 12 December at Rs104,000-106,000/t. Low demand from the stainless steel sector has effectively removed any possibility of a price recovery in the near term. Spot liquidity has been markedly lower than normal and a rebound is not expected. Volumes signed on long-term contracts for delivery in 2025 have also taken a dip and are at around 70-80pc of the volumes signed in 2023 for 2024 delivery. Weaker ferro-chrome demand and prices have led to lower production. India's ferro-chrome output declined from 1.3mn-1.4mn t in 2023 to an estimated 1.2mn t in 2024, and monthly consumption in the country is estimated to have decreased from 30,000-35,000t to 20,000-25,000t. Consumption is unlikely to rebound significantly until global and local stainless steel demand recovers. Suppliers typically turn to the export market when there is a supply surplus, with exports from India typically accounting for around 50pc of the country's output. But India's ferro-chrome exports are also falling. Shipments declined by 38pc year on year to 402,817t in January-September, compared with 648,475t over the same period a year earlier. Macroeconomic headwinds have dented global demand for stainless steel, and in turn ferro-chrome. European and Chinese demand was high in the first half of 2024 but has slowed significantly since then, with European buyers shifting their focus towards cheaper Kazakh material. Increased freight rates, port congestion and higher production costs have further weighed on exports. In addition, China has increased production and its domestic output now exceeds domestic consumption. This has weighed on domestic prices since August and increased supply in the export market. The market is unlikely to pick up until ferro-chrome inventories at China's port are consumed, a source told Argus . Decreasing demand and prices have made some suppliers' margins negative, forcing some to cut output by 50-60pc and others to shift their focus to producing manganese alloys, which offer stronger margins despite higher production costs. The cost of production for high-carbon ferro-chrome in India is around Rs116,000-119,000/t ex-works. Only producers with their own captive chrome ore mines are making a profit at present, sources said. Indian ferro-chrome suppliers also face issues with deteriorating chrome ore grade, which has led to increased production costs and lower-quality ferro-chrome output. The deterioration in ore quality is particularly evident in state-owned Odisha Mining Corporation (OMC) auctions — the premium for OMC's 50-52pc ore over its 48-49.99pc ore rose to above Rs1,000/t in early December. The higher premiums for high-grade ore, coupled with the drop in demand, have limited ferro-chrome producers' appetite to participate in OMC's auctions, as supply of high-grade ore is limited and only available at high premiums while low-grade ore is unfavourable as its consumption raises production costs. A lack of interest in OMC's monthly tender boosted this bearish sentiment and created further downward pressure on India's ferro-chrome prices. By Deepika Singh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Real, tariffs to hit Brazil steel imports

24/12/26

Viewpoint: Real, tariffs to hit Brazil steel imports

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China's GFEX launches polysilicon futures contracts

24/12/26

China's GFEX launches polysilicon futures contracts

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Japan’s crude steel output to recover in FY2025: IEEJ

24/12/26

Japan’s crude steel output to recover in FY2025: IEEJ

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Viewpoint: US tariffs, new EAFs may alter scrap flows

24/12/24

Viewpoint: US tariffs, new EAFs may alter scrap flows

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