There are a variety of products made and sold along the tungsten value chain, from tungsten concentrate, through ammonium para-tungstate (APT) to cemented carbides and beyond, each with its own relative margin and under the influence of a specific set of economic factors. These factors vary significantly within and between key market sectors, as do the resulting margins.
The CM Group has been actively analyzing the full global tungsten value chain to examine its structure and estimate the margins for the major intermediate products, with a view to assessing and comparing their profitability. This work follows on from CM’s well-established analysis of the upstream tungsten industry.
The fate of the upstream tungsten industry remains clearly in the hands of China’s economy and thus its industry policies, given the country’s dominant position in the global supply demand balance. The influence of China is likely to continue to create regulatory and political risk along the entire global tungsten industry value chain, exacerbated by the 2018 domestic crackdown on polluters and illegal capacity which, together with forced consolidation and regulatory compliance, is likely to create cost pressures for producers.
Although tungsten prices rose sharply in 2017 as a result of higher demand and restocking, we forecast prices to experience some headwinds through to 2021 due to the strategic release of stockpiled material, an oversupply from non-Chinese producers and slightly lower Chinese demand growth. Over the longer term, however, we forecast APT prices to track higher, driven by Chinese policy steady demand growth.