PART II DEVELOPMENT STATUS OF CHINA TUNGSTEN INDUSTRY IN 2021

2.1 Overview of Economic of China

2.1.1 Tungsten Production Capacity Increased Steadily

The production capacity of main tungsten products increased steadily. According to the statistics of CTIA, the production capacity of China of tungsten concentrate, ammonium paratungstate (hereinafter referred to as APT), ferrotungsten, tungsten carbide powder and tungsten cemented carbide is 177,000 tons, 196,000 tons, 30,000 tons, 90,000 tons and 70,000 tons respectively.

Due to the implementation of resource replacement projects and technical transformation and capacity expansion in some mines, the production capacity of tungsten concentrate increased slightly; Part of apt capacity gradually withdrew, while some capacity was added by technological transformation and capacity expansion, which decreased slightly overall; The technological transformation and capacity expansion of some powder and alloy enterprises have led to an increase in the production capacity of tungsten carbide powder, a strong demand for tungsten cemented carbide and a rapid growth in production capacity; Tungsten iron production capacity was flat. The production capacity of major tungsten products in China in recent five years is shown in Figure 1.

2.1.2 The Output of Main Tungsten Products Increased Significantly

According to the statistical analysis of CTIA, in 2021, the output of tungsten concentrate of China was 135,500 tons (converted into WO3, 65% tons, hereinafter referred to as standard tons), a year-on-year decrease of 2.25%. The national output of APT, tungsten carbide powder, tungsten cemented carbide and ferrotungsten increased by 9.52%, 29.04%, 24.39% and 20.00% respectively year-on-year: the economic situation at home and abroad improved and the recovery of demand driven the restorative growth of production and operation of tungsten industry. The output of tungsten products in recent 5 years is shown in Figure 2.

2.1.3 Tungsten Industry has Improved Better as Income has Reached a Record High

In 2021, the epidemic prevention and control achieved phased results, the global economy recovered well, the production of all walks of life resumed, driven the restorative growth of the tungsten industry, and the operating efficiency improved significantly. According to the statistical analysis of CTIA, the main business of the national tungsten industry received 106 billion RMB Yuan/ton, a year-on-year increase of 42.28%; The total profits and taxes reached 9.5 billion RMB Yuan/ton, a year-on-year increase of 29.25%; The profit was 5.9 billion RMB Yuan/ton, a year-on-year increase of 68.57%. The main business income and profit of tungsten industry in recent 5 years are shown in Figure 3.

2.2 Tungsten Products Structure

2.2.1 The Tungsten Product Structure Extends to Deep-processing

The adjustment of Tungsten product structure and industrial transformation and upgrading continued, and the output of high-end products increased. The production capacity of tungsten cemented carbidekeeps growing, especially the investment in bars and high-end tungsten cemented carbideNC blades continues to grow. In 2021, the conversion rate of APT to tungsten cemented carbidewas 53%, an increase of 6 % over the previous year, breaking the 50% mark for the first time, and showing an upward trend year by year.

2.2.2 The Overall Industrial Pattern Remained Stable

China's tungsten concentrate is mainly produced in Jiangxi, Hunan and Henan provinces, accounting for 85.47% of the total output, an increase of 0.53 % year-on-year. Apt producing areas are mainly distributed in Jiangxi, Hunan and Fujian. In 2021, the output of the three provinces totaled 89,200 tons, accounting for 77.64% of the country, an increase of 1.24 % over the previous, of which the output of Jiangxi accounted for 48.40% of the country, an increase of 5.06 % over the previous year.

The producing areas of tungsten cemented carbide are mainly distributed in Hunan, Fujian, Jiangxi and Sichuan. In 2021, the total output of the four provinces was 35,600 tons, accounting for 70% of the national output, which was basically the same as that of the previous year. Among them, the output of Hunan accounted for 34% of the national output, ranking first. Among the four provinces, the output of Fujian increased by 33.50% year-on-year, with the fastest growth. See Fig. 3, 4 and 5 for the output proportion of main production areas of tungsten concentrate, apt and tungsten cemented carbidein 2021.

2.3 Tungsten’s Market Price

Tungstens’ market prices rose moderately and new_ed reasonably. In 2021, major economies implemented loose monetary and fiscal policies and actively responded to the impact of the epidemic. The recovery momentum was obvious, which led to the recovery and stable operation of the tungsten market. Compared with other metals, the market price of tungsten has increased moderately and gradually upward, which is generally in the market equilibrium range in recent years.

The price of tungsten concentrate in Chian was in the range of 86,000 ~ 112,000 RMB RMB Yuan/ton. The price of tungsten concentrate was below 100,000 RMB Yuan/ton by the end of May, and rised rapidly in July, it fluctuated around 110,000 RMB Yuan/ton in the second half of the year. In 2021, the average annual price of tungsten concentrate was 100,500 RMB Yuan/ton, a year-on-year increase of 21.21%, the average annual price of apt was 153,800 RMB Yuan/ton, a year-on-year increase of 20.31%, the average annual price of APT in Europe was 289.30 USD/ton, a year-on-year increase of 35.86%, and the average annual price of ferrotungsten in Rotterdam was 28.39 USD / kg of tungsten, a year-on-year increase of 23.79%. See Figure 6, 7, 8, 9 and table 3

Table 3 Annual Average Price of Tungsten Products Worldwide

According to customs statistics, in 2021, the average price of China's exported tungsten products was US $39,607.91/ton of tungsten metal, with a year-on-year increase of 16.21%. The export prices of apt, tungsten trioxide, tungsten powder and tungsten carbide powder increased by 23.65%, 24.57%, 16.44% and 18.79% respectively.

2.4 Import and Export of Tungsten

2.4.1. Import and Export Recovered Growth

In 2021, China exported 32,962.24 tons of tungsten products (metal volume, the same below), a year-on-year increase of 45.62%. After two years of continuous decline, it showed a restorative growth, and the export volume new_ed to the average level of nearly five years, which was still lower than the historical high of 15.85% in 2018. In 2021, the export volume of tungsten products was US $1,547 million, with a year-on-year increase of 59.35%. After two years of continuous decline, it turned to positive growth. The export of raw material grade tungsten products was 21,634.71 tons, with a year-on-year increase of 60.22%, turning from decline to positive growth; The export of tungsten cemented carbide is about 8,300 tons (converted into metal), with a year-on-year increase of 22.06%. The competitiveness of China's tungsten cemented carbide products in the international market is gradually improved. See Table 4 for the export of tungsten products in recent 5 years.

Table 4 Export of Tungsten Products from 2017 to 2021 (tons of tungsten, US $100 million)

In 2021, the import of tungsten products was 5,986 tons (converted into metal volume, the same below), with a year-on-year increase of 13.07%, with positive growth for two consecutive years, slightly higher than the average level in recent five years. Tungsten concentrate and tungsten cemented carbideare the main imported products. In 2021, 2,656 tons of tungsten concentrate were imported, with a year-on-year increase of 62.60%, accounting for 44.37% of the total import, an increase of 13.52 percentage points over the previous year; 1400 tons of tungsten cemented carbidewere imported, down 6.67% from the previous year. See Figure 10.

In 2021, China's net export of tungsten products was 27000 tons, with a year-on-year increase of 55.55%; the net export volume was 768 million US dollars, with a year-on-year increase of 225.45%; In 2021, the total export volume of tungsten products was 5.5 times of the total import volume, while the total export volume was only 2.0 times of the total import volume, mainly due to the high price of imported high-end cemented carbide cutting tools.

2.4.2 The Four Major Export Destinations Increased Significantly Except the US

Japan, South Korea, Europe and the United States are the four major destinations for China's Tungsten exports. In 2021, tungsten products exported to Japan, South Korea, Europe and the United States were 6408.55 tons, 5856.12 tons, 7356.43 tons and 1940.9 tons respectively. Japan, South Korea and Europe increased by 73.19%, 62.11% and 75.64% respectively year-on-year, and the United States decreased by 17.58%. The tungsten products exported to the above four countries and regions accounted for 87.43% of the total tungsten products exported, a decrease of 0.07 percentage points over the previous year. Among them, the tungsten products exported to Japan, South Korea, Europe and the United States accounted for 25.99%, 23.75%, 29.83% and 7.87% of the total tungsten products exported respectively. Compared with the same period, the proportion of Japan, South Korea and Europe increased by 2.62%, 0.93 and 3.38 percentage points respectively, as shown in Figure 11 and 12.

2.5 Investment, Financing & Promotion of New Tungsten Projects

In 2021, the tungsten producers of China carefully planned a number of key projects around industrial transformation and upgrading, process and technology innovation, product optimization and quality improvement, which promoted the green and intelligent development of the industry and provided strong support for the high-quality development of the industry. The technological transformation of tungsten carbide powder intelligent production line of Zhuzhou Cemented Carbide Group, a branch of China Tungsten High Tech Co., Ltd, the CNC blade production line of Zigong Cemented Carbide, another branch of China Tungsten High Tech, the underground 5g network construction for mining of tungsten ore in Shizhuyuan Nonferrous Metals Co., Ltd. have been completed. Meanwhile, Ganzhou Industrial Park project with a total investment of 10.2 billion RMB Yuan by Jiangxi Tungsten Holding Group has been started, and the phase I construction of an annual output of 10,000 tons of tungsten powder and 8000 tons of tungsten carbide powder line，tungsten powder and tungsten cemented carbide mining production line of Xiamen Jinlu Haicang Tungsten Cemented Carbide Industrial Park (phase II) with a total investment of 2 billion yuan by Xiamen Tungsten are also have been started, and the annual output of construction has been increased 12000 tons of tungsten powder, 11,200 tons of mixture tungsten carbide powder (tungsten ready to press powder), 2000 tons of tungsten carbide mining tips production line and supporting facilities; With a total investment of 560 million RMB Yuan, the main infrastructure of the industrialization project of Lugu Base of Boyun Dongfang with an annual output of 2000 tons of high-efficiency and precision cemented carbide tools and high-strength and toughness extra coarse-grained tungsten cemented carbide tunneling tools has been completed.

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