FOCUS: Coronavirus spread clouds China tungsten market; participants wait on stimulus measures

The continued spread of the novel coronavirus (2019-nCoV) worldwide has weighed on China’s tungsten market in the week to Wednesday March 11, sources told Fastmarkets.

Ammonium paratungstate (APT) exporters experienced a slow market, while unrecovered downstream manufacturing, such as the automobile industry, in China also dragged the domestic tungsten market price down.

China APT export price moves down
The Chinese APT export price dropped by $2-5 per metric tonne unit (mtu) on Wednesday March 11 due to sluggish demand from overseas buyers, particularly those in Japan and South Korea, amid the coronavirus outbreak.

Fastmarkets assessed the price of tungsten APT 88.5% WO3 min, fob main ports China at $235-243 per mtu on Wednesday, down by 1.4% from the previous week.

Most sources reported a muted export market because of customers delaying signing their purchasing contracts and choosing to stand on market side lines.

“My Japanese customers have postponed signing long-term APT purchasing contracts, probably to late March or April, and are using stocks to sustain their current operations,” a trader source said.

Japanese companies usually start their financial year from April and have their whole-year plan ready in early March, however, due to the coronavirus situation, Japanese companies have been struggling to clear a production plan and have chosen to conduct purchases on a needs basis, the trader source added.

The grim mood following in the wake of the coronavirus has also affected the European market.

“My order is still in the air. I offered the price last week and thought I would get clear feedback early this week, however, customers were hesitant after the global stock markets plunged on Monday,” a second trader source said.

Domestic tungsten market declines
China’s Ganzhou Tungsten Association (GTA) published its APT price forecast for March at 141,000 yuan ($20,286) per tonne, down from the market price in late February. The domestic offer price for APT surged to 145,000 yuan per tonne at one point, but the price at which a deal could be struck was about 143,000 yuan per tonne two weeks ago.

“Though China’s coronavirus situation has improved a lot, downstream manufacturing is yet to recover. Manufacturers hold a very cautious view on economic development after the virus and demand for upstream products, such as APT, is declining” a third trader source said.

GTA’s forecast price for black tungsten concentrates 55% – the most popular raw material for APT plants – was 91,000 yuan per tonne for March, roughly equivalent to around 92,500 yuan per tonne for black tungsten concentrate 65%.

The trading price for 55% concentrates, however, has already dived below 90,000 yuan per tonne in the market, a source from GTA told Fastmarkets.

“APT producers are under pressure from domestic and foreign markets so reduced purchases of tungsten concentrates, while mines gradually resume production. With increased supply and reduced demand, the tungsten concentrates price is easing off,” the GTA source explained.

Fastmarkets’ latest assessment for tungsten concentrate 65% WO3, in-whs China was at 91,000-93,000 yuan per tonne on Wednesday March 11, down by 2.1% from the previous week.

Looking to the future
The future trend in the tungsten market depends on how long the global coronavirus situation lasts and whether China’s new infrastructure projects can boost economic growth, sources said.

Market sources are deeply concerned about the rapid spread of coronavirus, worrying that any isolation measures – such as those China took in late January – will disrupt local companies’ production and affect their need to import material from China.

“We are keeping a close eye on the coronavirus situation in Europe, though our APT customers in Germany tell us that they’re maintaining normal operations,” a fourth trader source said. “We hope the disease can be controlled and then subside as quickly as possible.”

Domestic companies are now relying on the ‘new infrastructure’ investments that the Chinese government announced it would accelerate.

“Tungsten is widely applicable in transport, energy, construction, electron and industrial usage. For example, tungsten is used to make circuit board, which is needed to construct fifth generation (5G) networks, data centers, artificial intelligence and industrial network infrastructure,” a producer source said.

Additionally, tungsten is an important feedstock for making cemented carbide, the so-called hardmetal, which is widely used for engineering machinery.

“Hardmetal tools are installed and used on machining equipment, so the construction of intercity expressways and railways will depend heavily on such machines,” the producer source added. “Hopefully, the infrastructure projects will boost China’s economy in the second quarter and the tungsten market will improve with the economic recovery.”