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Elan.com's Macroeconomic + Tungsten Market Forecast Summary for the Half Year of 2020

In 2019, some economic experts predicted that "2019 is the worst year in the past decade, but it may be the best year in the next ten years." Now I think that it is true. For the whole year of 2019, GDP grew by 6.1%, of which GDP grew by 6% in the fourth quarter. Under the impact of the outbreak in the first quarter of 2020, the GDP growth rate hit the first negative growth since 1992, which was -6.8% in the second quarter. With the epidemic under control and infrastructure investment accelerating, the GDP growth rate is expected to reach 2.5-6%, but the GDP growth rate in the first half of the year will still be around -2 to -0.5%.

The spread of the global epidemic intensified in the second quarter. With the resumption of production and production in Europe and the United States, the outbreak of the epidemic has now occurred. The US GDP fell by 4.8% in the first quarter, the predicted value in the second quarter was in the range of -30% to -50%, and the European GDP fell by 4.3 in the first quarter %, the predicted value for the second quarter is in the range of -9% to -15%. With the epidemic out of control, especially in autumn and winter, it is expected that the European and American economies will worsen and there is no hope of recovery throughout the year. From January to May, China exported about 7,800 tons of tungsten metal, down 22% year-on-year, and the data in May fell by 32%. In June, according to the feedback of major export companies, the situation of tungsten metal is still not optimistic. The year-on-year decline will be 25-30%. With the continuation of the summer break of foreign companies in the third quarter, some large-scale tungsten processing companies have stopped production reductions and layoffs. It can be expected that the tungsten export market in the second half of the year will not improve, and the consumption of tungsten will still be dominated by domestic consumption.

¡¡¡¡According to the National Bureau of Statistics, from January to May in 2020, the breakdown of domestic industries, in terms of operating income of enterprises above designated size, the mining industry fell 11.3% year-on-year, and the manufacturing industry fell 7.5% year-on-year. In terms of industrial added value of major industries, the metal products industry fell by 4.7%, the general equipment manufacturing industry fell by 4.9%, the automobile manufacturing industry fell by 7.9%, and railways, ships, aerospace and other transportation equipment fell by 4.8%. In terms of output of major products, metal cutting machine tools fell by 14.8%, automobiles fell by 23.6%, and mobile phones fell by 16.5%. Through the above data, the major industries and products related to tungsten terminal consumption have declined to varying degrees. Since the production orders of many companies are stock orders before and after the Spring Festival, the major large companies have not shown obvious signs from March to May. There are signs of contraction, but as the overall market demand for stocks decreases and terminal inventory consumption slows down, the domestic tungsten consumer market in June has already experienced significant pressure. It is expected that domestic tungsten consumption in the first half of the year will decline by 10-20% year-on-year. According to market research, the third quarter, especially July and August, will be the most difficult days for the development of the tungsten industry. The terminal processing enterprises in March and April also have pre-holiday stocking orders. The rise in raw material prices in May also prompted downstream companies to take orders and stock, but With the gradual desertion of the market in June, the off-season in July and August will be even weaker, but China's economy has already shown a positive and positive change, and directional infrastructure and consumption-stimulating policies have been continuously introduced, which is expected to bring more to the market after September. opportunity.

Comprehensive analysis of the domestic consumption and tungsten exports in the first half of the year. The domestic tungsten consumption in the first half of the year is expected to decline by 15-25% year-on-year (temporarily taken at a median value of 20%). The total amount of other tungsten products is 450,000 tons, which is equivalent to 50,000 tons of tungsten metal. In addition, the amount of metal exported from tungsten raw materials (excluding cemented carbide) in 2019 is about 20,000 tons. The total amount of overlapped calculations is about 65,000 tons. For the amount of metal, it is estimated that consumer demand in the first half of 2020 will shrink by about 65,500 tons. According to the output of 136,000 tons of tungsten concentrate and 70,000 tons of tungsten metal in 2019, the analysis from the survey data of this website shows that the output of domestic small and medium-sized mines fell slightly in the first half of the year, but the output of tungsten mines of major large and medium-sized enterprises did not Significant decline, the overall remained basically stable, under other conditions unchanged, equivalent to the first half of the market surplus of 0.65 million tons of metal, and according to the current market status, excess tungsten products are mainly concentrated in the tungsten ore link, conversion tungsten fine The increase in the inventory of the mine is about 12,600 tons.

According to the analysis of the supply and demand balance, the oversupply of the tungsten raw material market should have a sharp price drop. However, as the price of tungsten ore fell below the hearts of many mines and traditional traders, the price of 80,000 tons/ton. The market appears repeatedly, but demand is the core element that determines the market. Market confidence lacking consumer demand is still difficult to stabilize, and as demand in the third quarter becomes lighter, the tungsten raw material market will again face greater pressure, and market games are still concentrated in tungsten mines. With the APT link, drawing on the long-term tungsten price fluctuation trend, it can be expected that the tungsten price in the second half of 2020 is still likely to fluctuate slightly at the bottom. (The forecast is for reference only, not as an investment decision).

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