Minmetals Securities: The scarcity of tungsten resources and high-end products highlights the benefits of enterprises with high-quality mining resources and the layout of high-end tungsten products

The Zhitong Finance App learned that Minmetals Securities released a research report saying that the tungsten industry as a whole showed typical cyclical characteristics of sharp rise in volume and price, and profit elasticity greater than revenue elasticity. Currently, APT's domestic and foreign price differences remain high. In the short term, tungsten concentrate and APT prices are expected to be in a sideways phase. Price trends in the second half of the year need to focus on domestic mining quotas, downstream raw material reserves, and export conditions in the third quarter. Under the trend of revaluing the strategic value of tungsten metal and increasing demand for industrial upgrading, the bank believes that enterprises with high-quality mining resources and the layout of high-end tungsten products will continue to benefit.

Minmetals Securities's main views are as follows:

What did you see from the financial data? Volume and price have risen sharply, and profit elasticity is greater than revenue elasticity

The market value of the 16 sample companies in the tungsten industry chain increased significantly over the same period last year, with downstream high-end tungsten products companies Dingtai Hi-Tech and CSIC taking the lead. The industry as a whole shows typical cyclical characteristics where volume and price increases sharply, and profit elasticity is greater than revenue elasticity. By business, (1) leaders in the entire industry chain: companies with high-quality mining resources have the highest profit retention rate; (2) tools and hard alloy products: net price release, high profit flexibility; (3) new material platforms: steady and explosive coexist. In terms of overseas business development, going overseas is an industry trend, but internal segmentation is significant. The total foreign revenue of 14 comparable companies increased from 6.09 billion yuan to 13.89 billion yuan, +128.2% over the same period last year, accounting for a share of total revenue from 22.9% to 26.0%. The foreign revenue growth rate of all industry chain companies (Xianglu, Zhangyuan, Xiamen Tungsten, China Tungsten) was above 130%, mainly due to record high overseas tungsten price premiums and order transfers under export controls, making overseas the main area for redeeming the price increase dividends. The overseas penetration rate of domestic tools is still high, which is an important structural variable in the second half of the year and 2027.

Resource side: The self-sufficiency ratio determines profit success, and its own mining enterprises continue to strengthen resource-side integration

(1) 2026H1 tungsten ore resources are the absolute main force in the profit of the entire industry. Differences in resource self-sufficiency determine profit margins and risk exposure differentiation. The annual output of Chinatungsten Gaoxin Zhuyuan tungsten concentrate is expected to reach 10,000 standard tons in 2028. The industry in Xianglu Mountain, Xintianling, and Yaogangxian competes, and the self-sufficiency rate will further increase after injection. Xiamen Tungsten Industry acquired 30.17% of Jiangxi Jutong's shares for 593 million yuan and obtained control. The Dahutang tungsten ore resources will exceed the total volume of existing mines, but the results will not be realized in the short term. Currently, APT's domestic and foreign price differences remain high. In the short term, tungsten concentrate and APT prices are expected to be in a sideways phase. Price trends in the second half of the year need to focus on domestic mining quotas, downstream raw material reserves, and export conditions in the third quarter.

Deep processing end: demand rigidity is not afraid of high prices. The shortage of overseas tungsten raw materials will support the price of high-end products for a long time

Currently, the price of hard alloy has been reduced by 50% from the peak, and production has declined by only 3.4% due to the impact of high prices. The annual production and sales volume of hard alloy needs to focus on the “gold nine silver ten” seasonal manufacturing demand in the second half of the year. The overseas tool market is an important incremental market for Chinese hard alloy tools. Increased cost performance of domestic tools and tight overseas tungsten raw materials will support domestic tools going overseas for a long time; based on 2026H1 tool import data of 5.04 billion yuan, the bank estimates that domestic high-end tools have more than 10 billion alternative space throughout the year, and the tools to be replaced are mainly concentrated in high-end tungsten carbide blades, cutters, wire taps and other products. Domestic tool prices have declined, but the opening of a new round of overseas tool price increases will leave more room for Chinese tool companies to explore price increases and expand the market overseas. China's micro drilling industry chain continues to benefit, and bar and micro drill manufacturers are speeding up their layout. Affected by the tight raw materials of tungsten in Japan, the price of tungsten hexafluoride rose by more than 300% in the first half of the year, and the price of tungsten hexafluoride may remain high in the second half of the year and next year. The tight situation of tungsten raw materials in Japan will be difficult to ease in the short term, and the new production capacity will reach production in 2028. Demand for terminal applications in traditional tungsten fields is steady, and explosive growth in emerging fields such as AI, humanoid robots, and nuclear fusion will support an increase in total tungsten consumption for a long time. Looking forward to the future, the bank suggests focusing on changes in the international trade pattern of tungsten products, the overseas situation of domestic middle and downstream tungsten products companies, and the progress of construction of new production capacity in overseas tungsten smelting. Under the trend of revaluing the strategic value of tungsten metal and increasing demand for industrial upgrading, the bank believes that enterprises with high-quality mining resources and the layout of high-end tungsten products will continue to benefit.