Orient Securities: The tungsten industry's peak season inventory reserve sector has a basis for a rebound

The Zhitong Finance App learned that Orient Securities released a research report saying that in the medium term, the rigid characteristics of global tungsten supply will be difficult to quickly reverse. Active hoarding and protection of strategic resources by various countries has become a trend, or they may continue to reduce the total amount of tungsten resources available in global circulation, further strengthen supply constraints in the tungsten market, and expand price flexibility. “Key mineral anxiety” and “expectations of prolonged geopolitical conflict” continue to heat up, opening up space for global excess stocks of tungsten. The bank believes that the three factors of supply rigidity, “excess storage” demand driven by long-term geographical games, and the proximity of the peak season resonate, and tungsten prices have a basis for a rebound during the peak season.

Orient Securities's main views are as follows:

Supply: Policy games build supply rigidity, and it will still take time to implement large-scale overseas projects

At the domestic level, the Ministry of Natural Resources has issued the second batch of tungsten ore targets for 2026; of these, the second batch of 200 tons from Heilongjiang Province was distributed to Yangbishan iron ore (the first batch was 100 tons). The increase was limited. The bank expects the national mining index to maintain a slight year-on-year increase throughout 2026. At the same time, environmental protection and safety supervision efforts continue to increase, production capacity in small and medium-sized mines has been withdrawn, and the phenomenon of private excavation and uncontrolled mining has been effectively rectified. Under the triple constraint of fighting illegal violations, compliance mines are close to full production, and resource endowments continue to decline, long-term production may be difficult to grow rapidly. Overseas, Korea's Sangdong mine (the world's largest non-Chinese project) phase I (with an annual output of 2,300 tons of tungsten concentrate) was put into operation in early 2026, and the second phase (planned to be upgraded to 4,600 tons of tungsten concentrate per year) is expected to be put into operation in 2027; in addition, the US government has invested nearly 1.6 billion US dollars in the Cove Kaz supertungsten project in Kazakhstan through ExIM/DFC. The Cove Kaz tungsten project is expected to reach 12,000 tons (equivalent to about 15% of the current annual output of global tungsten mines), according to the plan Construction plans for engineering research, mine and plant selection will be completed and groundbreaking by the end of 2027, but it is still difficult to establish an effective supply scale by 2030. In the medium term, it is difficult to quickly reverse the rigid characteristics of global tungsten supply.

At the policy level, China's “Regulations for the Implementation of the Mineral Resources Law” officially implemented in June 2026 included tungsten in the national strategic mineral resources catalogue, superimposed the special regulatory policies issued by the State Mine Safety Supervision Administration, and further promoted domestic mining compliance costs. In terms of export control, since February 2025, China implemented a licensing system for exports of tungsten and other related items, and was later upgraded to a quota review+joint approval system; from February to June 2026, two batches of 80 Japanese entities were added to the control list and watch list. Exports of tungsten to Japan were substantially interrupted, and the supply available overseas continued to be compressed. Looking ahead, the US plans to ban the export of tungsten waste and scrap from August 27. If strictly enforced, it may affect the global supply pattern of recycled tungsten. It can be seen that active hoarding and protection of strategic resources by various countries has become a trend, or they may continue to reduce the total amount of tungsten resources available in global circulation, further strengthen supply constraints in the tungsten market, and expand price flexibility.

Demand: The AI computing power cycle continues to drive demand in the hard alloy/precision machining and semiconductor industry chains. At the same time, prolonged geographical conflicts are expected to cause excess reserves in the military sector, forming a two-wheel drive

In terms of AI semiconductors, demand for tungsten-based materials such as high-end processing tools, PCB micro drills, and tungsten hexafluoride (WF6) will simultaneously increase as the capital expenditure of major global cloud vendors opens in 2026. On the military side, according to CCM China, driven by the geographical situation, global military tungsten consumption will reach 3,000 tons in 2025, an increase of 36% over the previous year; orders for armor-piercing shells and aero engine parts are scheduled to reach 2027; the protracted trend of geographical conflicts between Russia, Ukraine, Iraq, and Israel is driving European and US defense departments to speed up inventory replenishment: According to Project Blue, the share of defense tungsten demand will increase from about 12% now to about 15% in 2027-28. “Key mineral anxiety” and “expectations of prolonged geopolitical conflict” continue to heat up, opening up space for global excess stocks of tungsten.

Mid-term research and long-term outlook: Overseas tool price increases have arrived, peak season may catalyze market rebound

Currently, domestic tungsten concentrate prices have gradually stabilized in August after falling more than 60% from a high of 1 million yuan in March, and the purchase prices of leading companies for long orders increased slightly from month to month. Looking ahead to the second half of the year, hard alloys and cutting tools are expected to pick up as the peak manufacturing season approaches in September-October, and as overseas tool manufacturers once again intensively raise prices, the cost performance ratio of high-end Chinese tools will rapidly pick up, and downstream demand is expected to be released during the peak season, or catalyze a rebound in the market.

Risk Alerts

Policy margins are shifting to the risk of easing, and downstream demand falls short of the expected risk.