China Tungsten Industry Association (CTIA) Calls For Production Reduction Of Tungsten Mines



China Tungsten Industry Association (CTIA) Calls For Production Reduction Of Tungsten Mines

On May 17, 2019, China Tungsten Industry Association (CTIA) held a forum for principals of some tungsten enterprises/groups in Ganzhou Jiangxi. A total of 20 principals of members of presidium of CTIA, including China Tungsten Hightech Materials Co., Ltd., Jiangxi Tungsten Holding Group Co., Ltd., Xiamen Tungsten Co., Ltd., China Molybdenum Company Ltd.,Chongyi Zhangyuan Tungsten Co., Ltd., Hunan Chenzhou Mining Co., Ltd., Rising Nonferrous Metals Co., Ltd., Guangdong Xianglu Tungsten Co., Ltd., ATTL Advanced Materials Co., Ltd. and Ganzhou Grand Sea W& Mo Group Co., Ltd., attended the forum. The forum aimed to analyze supply and demand trend of the tungsten market, research a mechanism to enhance self-regulation and establish information communication, give full play to the role of industry association in coordination and the role of major enterprises in guidance, promote the supply-side structural reform of tungsten industry, solve the low and middle-end excess capacity, strengthen market confidence, improve overall industry competitiveness, and jointly maintain the sound operation of tungsten market and high-quality development of the tungsten industry.

The price of tungsten market realized a slight rise and the international market price remained stable in Q1 2019, but after April 2019, the lack of market confidence, concern about the market expectation, excess capacity and other negative factors resulted in adverse market response, including weak supply and demand in the tungsten market, occasional cash transactions with deviation from mainstream price, slight price decline, and declined industry economic performance. According to the statistics of CTIA, in Q1 2019, revenues of 123 major tungsten enterprises in China realized YoY increase of 0.16%, QoQ decrease of 10.78%, 31.9 percentage points lower than the same period of last year; the taxes of 123 major tungsten enterprises realized YoY decrease of 17.32%, 78.64 percentage points lower than the same period of last year; and profits of 123 major tungsten enterprises realized YoY decrease of 46.18%; specifically, the profits of tungsten mines, tungsten smelters, cemented carbide enterprises, tungsten material enterprises and ferrotungsten enterprises realized YoY decreases of 34.79%, 35.67%,13.93%,58.88% and 82.26% respectively. The percentage of loss-incurring enterprises covered in the statistics of CTIA reached 35.00%, 14.27 percentage points higher than that in Q4 2018 and 20.27 percentage points higher than that in 2018; specifically, the percentages of loss-incurring mines, smelters, cemented carbide enterprises and tungsten material enterprises were 39.39%, 42.31%,27.08% and 36.36% respectively. The attendees conducted serious discussion about the supply and demand trend of tungsten market, economic situation of tungsten industry, high-quality development of the tungsten industry and other hot topics.

The forum reached a consensus: the production of tungsten concentrate overseas remains stable, the inventory level is low, and the short supply of tungsten materials in China remains due to lower tungsten grade, higher mining cost and intensified safety and environmental supervision; the fundamentals of long-term economic prosperity in China are more stable with increasing stabilizers in economic operation, market financing environment is improved, capital market ushered in recovery and consumer confidence index continuously rises thanks to the implementation of a series of policies represented by “six stables”; confidence index of nonferrous metal enterprises showed rise in Q1 2019 after decline for consecutive three quarters, the indexes of new orders, production and material purchase are higher than critical values, demonstrating a positive trend and confidence improvement in the nonferrous metal market; the high-techmanufacturing industry andequipment manufacturing industry, infrastructure construction and private investment increase steadily to continuously drive the demand of tungsten market, and fundamentals of tungsten market remain stable.

The forum agreed that the attendees will jointly maintain the supply order of tungsten material market and reduce the production of tungsten concentrate by ≥10% this year. According to the statistics of CTIA, the annual production of tungsten concentrate of the attendees makes up 86% of the production statistics of CTIA, and the active production reduction of the major tungsten enterprises will play a positive role in solving the contradiction between demand and supply in the current tungsten market. Meanwhile, CTIA calls tungsten mines nationwide to strictly meet the national control target of total exploitation of tungsten concentrate, control the capacity, reduce production, carry out reasonable distribution, jointly maintain the supply order of tungsten material market and promote the supply-side structural reform of tungsten industry.

The forum reached a consensus: The subsequent disposal of the tungsten products in question of the Fanya Metal Exchange brought adverse impact on the tungsten market expectation, but the impact is limited due to the disposal complexity, the tungsten market scale in China and multiple measures. CTIA will continue to serve as a communication bridge, actively implements market risk control and guarantees the sound operation of the industry and the security of national strategic resources.

The forum called for enhancement of industry self-regulation, promotion of social integrity construction and creation of a fair competition environment. The upstream and downstream enterprises should cooperate with absolute sincerity, carry out reasonable analysis and judgement of market trend, enhance market confidence, jointly resist vicious competition within the industry and vicious hype in the market, promote the overall price of upstream and downstream tungsten products to a reasonable range, drive the harmony, integrity and win-win of tungsten industry, bridge the gap with innovation, vigorously solve excess capacity, decrease cost and increase efficiency, accelerate thetransformation and upgrading of tungsten industry, and promote the high-quality development of the tungsten industry in China.