Tungsten metallurgy market

Currently, there is an overcapacity of APT and WO3 in the domestic market. The sharp price increase in 2007 led to the launch of many new projects, resulting in an APT capacity surplus of over 50,000 tons. Jiangxi Dayu Longxin Titanium built a new APT plant with a capacity of 5,000 tons in 2007, and Yunnan Malipo also established a new APT plant with a capacity of 5,000 tons. Due to supply exceeding demand, there is a situation where APT is available but not in the market. Coupled with the large fluctuations in market prices, the demand for tungsten’s downstream products has also declined significantly; in particular, the shrinkage of the automotive industry has further reduced the amount of tungsten used. Therefore, the APT market is not expected to improve in the short term. At present, the production process for APT is already highly mature. As reserves of wolframite decline, the proportion of production using scheelite is increasing. Many manufacturers now employ processes that involve either the decomposition of mixed wolframite-scheelite concentrates or the separate decomposition of scheelite. In Xiushui, Jiangxi Province, there are two companies that produce APT by decomposing pure scheelite; Hunan Chenzhou Mining also produces APT through the decomposition of scheelite. Thanks to advances in APT crystallization technology, it is now possible to produce crystals with shapes and sizes tailored to the requirements of customers

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The international market remains sluggish; the price of APT in the European market stays at 210–230 dollars per ton, while the export price of APT from China remains at 190–200 dollars per ton. This week, the price of ferrotungsten in Europe remained at 23–26 US dollars per kilogram. The price of domestic scheelite concentrate has risen to 60,000–62,000 yuan per ton, but most tungsten concentrate producers are also reluctant to sell at the moment, as there isn’t much profit margin available right now. Overall, the entire tungsten concentrate market is characterized by high prices but a lack of demand, with very low transaction volume. Affected by weak demand and low prices, some small tungsten mines have ceased operations at present, while larger tungsten mining companies tend to be reluctant to sell their products at low prices. This has led to a slight increase in the price of APT on the market; the current average trading price is 93,000–94,000 yuan per ton, up by 1,000 yuan per ton compared to last week. However, due to weak market demand, sales performance is also not optimistic. 2009-04-21 March market outlook for tungsten – Weak demand persists. Market review: Domestic tungsten mines resumed operations in March, but demand remained weak, leading to a decline in tungsten prices. At the beginning of March, the price of domestic tungsten concentrate was 62,000–64,000 yuan per ton, and it dropped to 56,000–57,000 yuan per ton by the end of March. In March, the average price of domestic tungsten concentrate was 57,400–59,200 yuan per ton, while in February it was 63,800–65,300 yuan per ton. This represented a month-on-month decline of 10.03%, and a decrease of 39.19% compared to the average price in March 2008. Other tungsten products also showed a downward trend. At the beginning of March, the price of ferrotungsten was 120,000–125,000 yuan per ton, but it dropped to 110,000–113,000 yuan per ton by the end of the month; the average price of ferrotungsten in March decreased by 11.09% on a month-on-month basis. The price of APT dropped from 96,000–98,000 yuan per ton at the beginning of March to 91,000–92,000 yuan per ton, representing a month-on-month decline of 5.7%. Figure 1: Trend of APT prices in the European market from 2008 to 2009 (MB quotes). Figure 2: Trend of tungsten concentrate prices in the domestic market from 2008 to 2009 (producer quotes). Compared with the domestic market, demand in the international market is weaker, with lower transaction volumes and minimal price fluctuations. At the beginning of March, the international price of ferrotungsten was 29.5–31 USD per kilogram, and it dropped to 23–26 USD per kilogram by the end of March. In March 2009, the average price of ferrotungsten was 26.54–27.85 dollars per kilogram, compared to an average price of 29.5–31 dollars per kilogram in February, representing a 10% decline on a month-to-month basis. It was 31.1% higher than the price in March 2008. In March 2009, the average price of APT in the European market was 210–230 dollars per ton, whereas in March 2008 it was 255–257 dollars per ton, representing a year-on-year decline of 16%. 2 A significant decline in exports 2.1 From January to February 2009, the production of tungsten concentrate increased by 25.53%. According to statistics from the China Nonferrous Metals Industry Association, the volume of tungsten concentrate (65% WO3) produced across the country in February was 4,918 tons, representing a month-on-month increase of 23.47% ； From January to February, domestic tungsten concentrate production amounted to 8,901 tons, a year-on-year increase of 25.53%. Starting in November 2008, the main tungsten mines and smelters in Jiangxi and Hunan began to reduce production or shut down. In mid-to-late February, domestic tungsten enterprises resumed operations one after another, which resulted in higher production in February compared to January. In January and February, Hunan produced 3,141 tons of tungsten concentrate, a year-on-year increase of 108.89%; Jiangxi produced 3,694 tons of tungsten concentrate, a year-on-year decrease of 15.68%. In January and February, Jiangxi accounted for 41.5% of the country’s total tungsten concentrate production, while Hunan accounted for 35.2%; together, Jiangxi and Hunan made up 76.7% of the nation’s total tungsten concentrate production. In early 2008, Hunan suffered from a snowstorm and freezing event of unprecedented severity in a century, which had a serious impact on the production of tungsten concentrate; as a result, the output was **lower than that in the same period of 2009. According to the production statistics for January and February, Guangxi, Henan, and Fujian have seen rapid growth in production, and their share of the national total is also increasing. Table 1: Equivalent amount of tungsten concentrate in various regions of China from January to February 2009 (equivalent amount based on 65% WO3 content): Unit: tons. Region (Tungsten Concentrate): January quantity, February quantity, Total for January–February, Year-on-year percentage change. Jiangxi: 1372, 2322, 3694, -15.68; Hunan: 1672, 1469, 3141, 108.89; Guangdong: 136, 126, 262, -5.37; Guangxi: 146, 124, 270, 83.93; Yunnan: 62, 16, 78, 0.01; Fujian: 116, 215, 331, 63.21; Henan: 480, 645, 1125, 114.29. Total: 3983, 4918, 8901, 25.53. Since 2000, China has implemented an export quota system for tungsten, and as a result, tungsten concentrate has been included among the commodities prohibited from export. This is a major step taken by our country to revitalize the tungsten industry and protect strategic resources. China’s tungsten industry has also developed rapidly in recent years; in 2008, it generated sales revenue of 39.1 billion yuan, which is more than five times the sales revenue in 2001. 2.2 Imports and exports of tungsten continued to decline in February. According to statistics from the Chinese customs, China’s imports of tungsten products in January and February 2009 amounted to $19.27 million, a 12.1% decrease compared with the same period the previous year ； The export value was 67.78 million US dollars, a 29.1% decrease on a year-on-year basis. Table 2: Net tungsten exports in 2008
Year: 08.9, 08.10, 08.11, 08.12, 09.1, 09.2, 09.1-2, 08.1-2
Exports (tons of tungsten): 2147.8, 2395.7, 1657.8, 2114.8, 1176.7, 1099.6, 2276.3, 2806.7
Imports (tons of tungsten): 610.5, 460.4, 677.8, 398.4, 446.9, 418.9, 865.8, 824.7
Net exports (tons of tungsten): 1537.3, 1935.3, 980, 1716.4, 729.8, 680.7, 1410.5, 1982
In the first two months of 2009, China’s tungsten exports amounted to 2276.3 tons, a decrease of 18.9% compared to the previous year ； The import volume of tungsten during the same period was 865.8 tons, slightly higher than the import volume in the same period of 2008. Affected by the financial crisis, exports showed a downward trend in the fourth quarter, and exports dropped sharply in the first quarter of 2009. In January and February 2009, the net export volume of tungsten was 1,410.5 tons, a 28.8% decrease compared to the same period in 2008. The export tariffs that plagued 2008 will continue to affect 2009 as well; amid the financial crisis, demand is weak and exports are extremely difficult. Some favorable measures have also been introduced recently; as of January 1, 2009, mandatory commercial inspection for the export of APT and tungsten oxide was abolished, reducing the number of intermediate steps in the business process and saving costs, which is beneficial for enterprises. Mandatory commodity inspection is a routine check in China, while foreign customers only require that products meet quality standards; therefore, it is reasonable to abolish mandatory commodity inspection. In February 2009, China exported 160 tons of APT, with a total export volume of 293 tons for January and February combined, representing a 49.25% decrease compared to the same period last year ； In February, 269 tons of ferrotungsten were exported; the total export volume for January and February combined was 732 tons, a decrease of 20.62% compared to the same period last year ； In February, 123 tons of tungsten trioxide were exported; the total export volume for January and February combined was 313 tons, a decrease of 18.68% compared to the same period last year ； From January to February, 325 tons of tungsten oxides and hydroxides were exported, a decrease of 25.17% on a year-on-year basis. In terms of powder products, China exported 93 tons of tungsten carbide in February, with a total export volume of 258 tons for January and February combined, representing a 48.44% decrease compared to the same period last year ； From January to February, 215 tons of tungsten powder were exported, representing a year-on-year increase of 18.28%. In February, China exported 22 tons of tungsten wire, with a total export volume of 45 tons for January and February combined, representing a 51.25% decrease compared to the same period last year. From January to February 2009, China exported 113 tons of APT to Western Europe, a decrease of 60.99% compared with the same period last year ； 179.7 tons were exported to Japan, a 34.1% increase compared to the same period last year. From January to February, the United States and South Korea did not import APT from China. From January to February 2009, China exported 511 tons of ferrotungsten to Western Europe, a decrease of 21.98% compared with the same period last year ； 205 tons were exported to Japan, a 95.24% increase compared to the same period last year. No ferrotungsten was exported to the United States in January and February. On the import side, in February China imported 813 tons of tungsten ore sand and concentrate; the total import volume for January and February combined was 1,551 tons, representing a 10.76% increase compared to the same period last year. Of this, 362 tons were imported from Canada, representing a year-on-year increase of 6.42% ； 462 tons were imported from Russia, representing a year-on-year increase of 10.28% ； 117 tons were imported from the Congo; no imports were recorded during the same period in 2008 ； 203 tons were imported from Vietnam, representing a year-on-year increase of 1106.8% ； 121 tons were imported from Rwanda, representing a year-on-year increase of 61.88%. The volume of tungsten ore imported from Vietnam has increased significantly; the price of tungsten ore in Vietnam is even 1/3 lower than that in the domestic market. Companies such as Xiamen Tungsten Industry import tungsten ore from Vietnam. At the same time, tungsten concentrate produced in China is also showing a trend of flowing into Vietnam. According to Antaike’s investigations, tungsten concentrate is smuggled out in Guangxi, which borders Vietnam, and it is difficult to put a stop to this activity due to the pursuit of excessive profits. Domestic enterprises have put forward some suggestions regarding imports and exports to facilitate the development of China’s tungsten industry. Companies believe that the production of tungsten powder and tungsten carbide powder requires a certain level of technical expertise, and it is difficult to gain a foothold in the international market; therefore, export incentives should be provided, as only by participating in international competition can technological progress be achieved. Imposing tariffs hinders such technological progress. Moreover, since the APT production technology has reached an internationally advanced level, its export can be restricted. Import VAT should be treated differently depending on whether the products are in surplus or in short supply; for products that are in short supply or are of strategic importance, it is best to keep the import VAT at 13% unchanged. With the VAT on imported resources rising from 13% to 17%, local governments lose 4 percentage points, which reduces their motivation to attract investment. Import and export management policies need to be refined, with stricter controls on the import of rare and valuable non-ferrous metal waste materials (such as petroleum catalysts, waste cemented carbides, and waste lithium-ion materials, which contain high levels of metal). These materials should be treated with the same importance as imported minerals and resources obtained through overseas exploration. It is recommended to adopt a registration system to enable a small number of high-quality enterprises to handle imported waste. Review of March 2009 Market Highlights for Tungsten 3.1 Production and Sales Performance of North American Tungsten in the First Quarter of 2009 On March 4, North American Tungsten released data on its production and sales for the period from October to December 2008, which corresponded to the first quarter of the 2009 fiscal year; these figures referred mainly to the output from the Cantung tungsten mine and the Mactung tungsten mine located in the Northwest Region of Canada. In the first quarter of fiscal year 2009, North American Tungsten reported a net profit of $4.92 million, whereas in the first quarter of fiscal year 2008, the company suffered a net financial loss of $4 million. Total revenue in the first quarter of 2009 reached $17.6 million, an increase of 49.7% compared to the same period in 2008. Among these, the company’s sales revenue for the first quarter of fiscal year 2009 included revenue from tungsten concentrate as well as revenue from the downstream product APT. In the first quarter of fiscal year 2009, **100,607 tons of tungsten sand were produced in this mining area, with a tungsten trioxide content of 1.17%; in the first quarter of 2008, the output of tungsten sand was 94,916 tons, with a tungsten trioxide content of 1.03%. Meanwhile, the company’s average tungsten recovery rate also increased from 73.6% in 2008 to 74.6% in 2009. In the first quarter, North American Tungsten’s NI 43-101 report updated the reserves and resources for the Cantung tungsten mine. Before September 30, 2008, the proven reserve of the Cantung tungsten mine was 655,706 tons, with a tungsten trioxide content of around 1.1%. Recent estimates show that the proven tungsten reserves in the Cantung tungsten mine amount to 1.43 million tons, with a tungsten oxide content of 1.25%. Table 4: Import and Export of Tungsten Products in China in February 2009
Unit: tons, 10,000 US dollars

| Name | February | Cumulative | February | Cumulative | Year-on-Year % | Cumulative Amount | February | Cumulative | Year-on-Year % | Cumulative Amount |
|------|----------|------------|----------|------------|-----------------|--------------------|----------|------------|-----------------|--------------------|
| Tungsten ore and concentrates | 813 | 1,551 | 10.76 | 1,395 | 0 | 0 | 0 | | | |
| Tungstic acid | 0 | 0 | 0 | 2 | 22 | -45 | 58 | | | |
| Tungsten trioxide | 0 | 0 | -87.79 | 3 | 123 | 313 | -18.68 | 645 | ① | 0 |
| Ammonium paratungstate | 3 | 17 | 6.38 | 21 | 160 | 293 | -49.25 | 539 | | | |
| Sodium tungstate | 0 | 0 | 0 | 3 | 23 | -68.84 | 40 | | | |
| Calcium tungstate | 0 | 0 | 0 | 0 | 0 | 0 | | | | |
| Ammonium metatungstate | 0 | 0 | -100 | 0 | 156 | 280 | 55,957.60 | 602 | | |
| Other tungstate salts | 1 | 1 | 142.58 | 1 | 0 | 0 | | | | |
| Tungsten carbide | 1 | 1 | -74.79 | 8 | 93 | 258 | -48.44 | 782 | | | |
| Ferrotungsten | 0 | 0 | -64.93 | 1 | 269 | 732 | -20.62 | 1,482 | | | |
| Ferrosilicon tungsten | 0 | 0 | 0 | 0 | 0 | 0 | | | | |
| Tungsten powder | 1 | 4 | -47.49 | 10 | 152 | 215 | 18.28 | 688 | ② | 0 |
| | | -90.3 | 3 | 0 | 0 | | | | ③ | 2 |
| | | 3 | -65.7 | 48 | 196 | 310 | 49.16 | 760 | | |
| Tungsten wires | 5 | 8 | -61.37 | 138 | 22 | 45 | -51.25 | 365 | | | |
| Tungsten scrap | 0 | 115 | -6.58 | 238 | 0 | 0 | | | | |
| Other tungsten products | 1 | 4 | -42.14 | 59 | 12 | 26 | -70.33 | 192 | | | |
| Total value | 827 | 1,704 | 7.02 | 1,927 | 1,356 | 2,841 | -18.85 | 6,778 | ① Oxides and hydroxides of tungsten not listed elsewhere; ② Unrolled tungsten, including bars and rods formed by simple sintering. | ； Waste scraps ③ Tungsten bars and rods, except those that have been simply sintered ； Profiles and special-shaped profiles, sheets, plates, strips, foils. 3.2 Profits in the non-ferrous metals industry dropped by 40% in 2008; investment in metal processing cooled down. According to statistics from the China Non-ferrous Metals Industry Association, profits of enterprises in this industry declined significantly in 2008, with industry-wide losses occurring especially in the fourth quarter. It is estimated that the main business revenue of the non-ferrous metals industry in 2008 will be 2.1 trillion yuan, representing a 10% increase on a year-on-year basis; the profit generated will be around 80 billion yuan, a decrease of about 45% compared to the previous year. In the fourth quarter, 73 key enterprises under monitoring incurred a loss of 12.75 billion yuan after accounting for profits and losses, with the magnitude of these losses increasing month by month. It is reported that last year, the output of ten non-ferrous metals in our country (according to preliminary figures) was 25.19 million tons, representing a year-on-year increase of 6.72%. This growth rate was 16.72 percentage points lower than that of the previous year, marking the lowest growth rate since the new century. Among them, copper production was 3.78 million tons, up 8% year-on-year; primary aluminum production was 13.18 million tons, up 4.9% year-on-year; lead production was 3.21 million tons, up 16.3% year-on-year; and zinc production was 3.91 million tons, up 5.4% year-on-year. In 2008, the total value of imports and exports of non-ferrous metals was 87.365 billion US dollars, remaining roughly the same as the previous year. Last year, the industry invested 233.19 billion yuan in fixed assets, a year-on-year increase of 40.9%. In this year, the investment amount for new projects in the non-ferrous metals industry was 206.173 billion yuan, representing an increase of 18.05% compared to 2007. With fewer new projects starting up, the enthusiasm for investment in non-ferrous metal processing has begun to decline. 3.3 Large deposits of scheelite worth over 90,000 tons discovered in Qimen County, Anhui Province. The 332rd Geological Team of the Anhui Provincial Bureau of Geology and Mineral Exploration recently released the latest information on mineral exploration; this team found deposits in Dongyuan, Qimen County in southern Anhui, with a total resource volume of 96,200 tons and an industrial reserve of 65,000 tons of scheelite. It is reported that the Qimen Dongyuan scheelite deposit is located in the Proterozoic shallowly metamorphosed rock series of the Jiangnan Paleoland; the ore-bearing rock bodies are granodiorite porphyries, characterized by shallow burial depths and large scale. 3.4 The 700-ton tungsten alloy rod production line at Ganzhou Zhongrui has been successfully put into operation. According to the Jiangxi Provincial Department of Industry and Information Technology, the project for producing tungsten carbide alloy materials and precision molds at Ganzhou Zhongrui Materials Technology Co., Ltd., which began construction in August 2007, saw its 700-ton tungsten alloy rod production line go into operation successfully in March. This marks an important step forward in the development of Ganzhou’s tungsten industry toward higher levels of precision and sophistication. The total investment in the project is 30 million US dollars. Once it reaches full operational capacity, the facility will be able to produce 700 tons of tungsten alloy rods per year. It is expected that annual sales revenue of 400 million yuan and profits and taxes of 50 million yuan can be generated. 3.5 Ganzhou city purchases and stocks tungsten and rare earths. Ganzhou is known as the “World Tungsten Capital” and serves as a “national distribution hub and important processing base for tungsten and rare earths”. Over the past three years, its tungsten production has accounted for over 30% of the country’s total tungsten output. The decline in the prices of non-ferrous metals has exceeded what local enterprises can bear, and tungsten and rare earths are the local \"key industries\"; therefore, intervention by the local authorities is inevitable. On January 20, 2009, ** in Ganzhou City issued the \"Notice on the Implementation Measures for Carrying Out the Stockpiling of Tungsten and Rare Earth Products in Ganzhou City,\" deciding that from January to December 2009, 1.8 billion yuan worth of tungsten and rare earth products would be acquired and stored in order to support the local tungsten and rare earth industries. The financial crisis led to a sharp drop in prices and a reduction in orders. In late October 2008, the price of domestic tungsten concentrate fell from 85,000 yuan per ton to 65,000 yuan per ton, and by the end of 2008 it had dropped to 53,000 yuan per ton. Due to the suspension of production for price stabilization, the current price has risen back to 56,000–58,000 yuan per ton. Zhangyuan Tungsten is the best tungsten enterprise in Chongyi, Ganzhou. In 2008, the company achieved sales revenue of 1 billion yuan, while the figure is expected to be only 800 million yuan in 2009. Although March is typically a peak period for consumption, orders have declined significantly this year, and the outlook for the second quarter is also not optimistic. Tungsten accounts for 50 to 60 percent of **the fiscal revenue in Chongyi County (Ganzhou City). Tungsten enterprises in Ganzhou ceased production to maintain product values at the end of 2008. Starting from December 1, 2008, all tungsten manufacturing companies in Ganzhou stopped production and adopted measures to preserve the value of their products. Based on the production quotas set by the Ministry of Land and Resources, Ganzhou produces 20,000 tons of tungsten per year, accounting for 40% of the country’s total tungsten output. Two months after the production halt, tungsten prices rose by only 5%–10%. Due to the unfavorable demand, there was no significant impact. According to data released by Ganzhou City, in 2007, enterprises in the tungsten industry that met the specified size criteria generated an industrial output value of 14.206 billion yuan, while enterprises in the rare earth industry that met these criteria achieved an industrial output value of 8 billion yuan. Together, these two sectors accounted for 12.9% of the city’s GDP, making them the largest single industry in the region. In 2007, the total output value of China’s tungsten industry was 35.6 billion yuan. The procedures for procurement and storage in Ganzhou: The target enterprises for such procurement and storage activities in Ganzhou are mainly the key deep-processing enterprises in the city that deal with tungsten and rare earths. The reserve method involves the company pledging its products to a financial institution, which then issues loans to the company that holds the pledges. Ganzhou has initially planned to purchase 10,000 tons each of tungsten and rare earth separation products. The funding required for this purpose is approximately 1 billion yuan for tungsten and 800 million yuan for rare earths, totaling 1.8 billion yuan. As for exactly how much will be collected, it still depends on market trends; the key to procurement lies with the banks. **It is merely a recommendation to the bank; the bank will conduct its own review, and it is the bank that decides whether to grant the loan or not. **It’s just a loan discount, around 10 million; 1.8 billion includes both the discount and the loan amount. Among them, loans are those obtained by storage enterprises by pledging their products to banks ； The discount consists of three components: 50% of the local share of value-added tax paid by the enterprise responsible for storage, 3 million from the Ganzhou Industrial Development Fund, and a total of 6 million from the various county-level authorities that benefit from this initiative. Industry associations explain that deep-processing enterprises are the main ones involved because it is these enterprises that use the products to be stored, and their participation in the storage process helps to stabilize the prices of such products. The local legal deep-processing enterprises are all relatively large in scale and go through the approval process. In March 2009, loans amounting to 81.8 million yuan were provided for such purposes. As of March 17, 2009, 34 entities in the first batch had received approval, with loan amounts totaling 550 million yuan. Among them, three tungsten companies and five rare earth companies have received bank loans totaling 81.8 million, while another 26 companies are under review by banks. The pledge value set by the bank is roughly 60%–70% of the product’s price. 3.6 Production and sales conditions of tungsten enterprises during the financial crisis: Zhuzhou Cemented Carbide Group Co., Ltd. In 2008, the company focused on adjusting its product portfolio in order to cope with the financial crisis, worked to improve its equipment capabilities and R&D skills, and strengthened its long-term development potential. That year, it achieved sales revenue of 5 billion yuan and generated foreign exchange earnings of 131 million US dollars, representing a year-on-year increase of 2.44%. By March, the company had returned to full production capacity, up from operating at less than half capacity in January. Nanchang Cemented Carbide Co., Ltd.: Since 2007, the appreciation of the RMB, the abolition of export tax rebates, and rising export tariffs have had a significant impact on the company’s operations. 80% of the company’s products are exported abroad; the markets in Europe and the United States have shrunk significantly, while emerging economies such as India and Brazil have had a relatively minor impact. Due to insufficient orders, the company has adopted measures such as reducing salaries and implementing rotational breaks in order to cope with the low level of activity, while striving to avoid layoffs. Chongyi Zhangyuan Tungsten Industry Co., Ltd.: According to the company, it was most affected by the financial crisis in the fourth quarter of 2008, with a slight recovery in the first quarter of 2009. In 2008, the company achieved sales revenue of 1 billion yuan and a profit of 90 million yuan. Two-thirds of the company’s products are exported, while one-third is sold domestically. In the first quarter of 2009, the company operated at near full capacity with no reductions in production. This is partly because the company is a leader in the domestic tungsten industry, and partly because it prepared in advance for a deteriorating market. Demand for the company in South Korea and the United States is declining rapidly, while the decline in Europe and Japan is less severe. In the first quarter of 2009, domestic customer demand had little impact, while the degree of impact is likely to increase in the second quarter. Despite weak demand, the company hopes to maintain its 2008 sales volume in 2009; as a result, sales will be lower than in 2008, estimated at 800 million yuan. So far, the company has not laid off employees or reduced salaries. The company’s hard surface materials production line has a capacity of 500 tons, and production began in 2009. Ganxian Shirui Mineral Company: The company holds 15,000 tons of scheelite reserves in Ganxian, with an expected increase to 60,000 tons, and the grade is 0.7%. The output from its own mines is 2,000 tons per year, while other raw materials come from provinces such as Henan, Shaanxi, and Gansu. 30% of the raw material is wolframite, and 70% is scheelite. APT has a production capacity of 6,000 tons; its output in 2008 exceeded 5,000 tons, and there are no export quotas. In 2008, the company’s sales revenue was 1.2 billion yuan, with a profit of 10 million yuan. Shirui Mineral Products currently has no inventory, and there were no significant reductions in production or layoffs in 2009 either. The company exports a large amount of tungsten powder and tungsten carbide powder, operating at near full capacity. The current company production is not greatly affected, but the product prices are low. The newly built cemented carbide factory will come online by the end of March 2009, with an annual production capacity of 700 tons. The investment amount is 300 million yuan; it will mainly produce rod products, 70% of which will be exported. Jiangxi Rare Earth Metal Tungsten Industry Group Company: According to the company, its sales revenue increased significantly from 2004 to 2008 – it was 120 million yuan in 2004, while by 2008 it had reached 6.1 billion yuan. In line with its development goals, the company plans to achieve sales revenue of 10 billion yuan by 2009. Jiangtung Co., Ltd., of which the parent company holds a 49% stake, boasts significant resource advantages, a large scale, strong profitability, and a skilled workforce; it constitutes a major source of income for the parent company as well. The company has a number of new projects going into production, which will be the main source of growth in 2009. The 20,000-ton hydrogen storage alloy project is under construction, with the first phase of 5,000 tons to be completed by the end of May 2009. The company is investing heavily in this project because it is highly optimistic about hybrid vehicle technology. According to Toyota, the company will produce 400,000 hybrid vehicles in 2009, which creates a high demand for hydrogen storage alloys. Ganbei Molybdenum Company in Xiushui, Jiangxi has built a new production facility with a capacity of 5,000 tons of ammonium molybdate; the first phase with a capacity of 2,000 tons is already in trial production. The company owns the Fengning molybdenum mine in Hebei, which can supply raw materials for the company. Jiangxi Tianhe New Materials Co., Ltd. was established through joint investment by Jiangxi Rare and Rare Earth Metal Tungsten Industry Group Company, Zhejiang Tianshi Powder Metallurgy Co., Ltd., and Wenzhou Hewei Investment Co., Ltd., and its business registration was completed in July 2006. 3,000 tons of cemented carbide are under construction, with 1,000 tons in the first phase already in operation. Xiamen Tungsten Industry: The company possesses a complete industrial chain, and by taking proactive measures to address crises, it was less affected by the financial crisis. In 2008, the company achieved sales revenue of 5.6 billion yuan; it had 5,000 employees and did not lay off any staff. In 2008, 1,500 tons of cemented carbide were produced, 1,000 tons of lithium cobalt oxide, and 2,300 tons of hydrogen storage alloys. Cobalt raw materials can include cobalt chloride, cobalt trioxide, and electrolytic cobalt. The company uses 1,000 tons of cobalt metal each year, of which 200 tons are used in hydrogen storage alloys; 100–200 tons of cobalt can be recovered from waste cemented carbides. The raw materials for tungsten come from Luanchuan scheelite and recycled cemented carbides, the Xingluokeng tungsten mine in Fujian, as well as imported tungsten ore. In the first half of 2009, the company received few orders for tungsten products; exports of APT and tungsten trioxide accounted for 40%, while exports of cemented carbide accounted for over 50%. The company uses 70% white tungsten and 30% black tungsten as raw materials, with a comprehensive tungsten recovery rate of over 97%. Although the processing cost of white tungsten is high, its use is already well-established; Zigong’s cemented carbide manufacturers have always used white tungsten, and large companies such as Sandvik are willing to accept products made from it. In the future, improvements will be made in automated control and quality enhancement, thereby reducing costs and improving competitiveness. The company already holds a large share of the tungsten market, so it is expected to remain stable in 2009. The company has almost no inventory of its products, but there is some stock of raw materials. Strive for zero inventory during the financial crisis. Demand for automobiles has decreased by 30%, and demand for geological exploration is also falling, both of which will affect the demand for tungsten. Foreign consumers have some tungsten in stock, and there will be no significant demand before May. 3.7 In 2008, Tiangong International ranked first in the country in terms of high-speed steel production. According to the China Special Steel Enterprises Association, in 2008 Tiangong continued to lead the nation in both high-speed steel production and exports, accounting for nearly 40% of the total high-speed steel production in the country ； High-speed steel exports account for as much as 70% of the country’s total high-speed steel exports. For eight consecutive years, Tiangong has ranked first in the country in terms of high-speed steel production, and it has become one of the most competitive specialized manufacturers of high-speed steel both domestically and internationally. In addition, Tian Gong has successively introduced advanced production equipment in the special steel sector, such as flat bar production lines, 910 rolling production lines, and 1,300-ton precision forging facilities. 4 Market Analysis and Outlook: Domestic tungsten mining production has returned to normal. In the middle and late February, domestic tungsten manufacturers resumed production one after another, alleviating the supply shortage. If tungsten prices do not drop sharply, the likelihood of widespread production halts is low. **Organizations at all levels collect and store tungsten. Ganzhou City in Jiangxi Province has already begun to purchase and store tungsten, and the amount of tungsten to be acquired will be determined based on market trends in the future. Hunan, Gansu, and Guangxi may also decide to stockpile tungsten, which will support its price; at least the current price represents the bottom level determined by policy measures. Vietnam’s low-cost ferrotungsten is impacting the market. The price of tungsten concentrate in Vietnam is low; according to traders, the price of tungsten ore there is even 1/3 lower than that in the domestic market. Domestic manufacturers saw this opportunity and therefore invested in setting up factories locally to produce downstream tungsten products. There are no tariffs on the export of ferrotungsten and APT from Vietnam, which gives it a significant cost advantage over China. A 20% tariff is imposed on Chinese exports of ferrotungsten, while a 10% tariff is applied to APT. Vietnam’s tungsten production is low, and it has had little impact on the market over the past few years. However, starting from the end of 2008, as the global financial crisis intensified, the tungsten industry was also greatly affected, with declining demand and falling exports. The impact of low-cost smuggled tungsten ore on the tungsten industry is becoming increasingly severe. Looking back at March 2008, domestic tungsten concentrate prices also showed a gradual downward trend, and this decline continued until the end of April 2008. Looking ahead to 2009, the economic crisis continues to affect the market, with no signs of it bottoming out; therefore, a recovery in the market in May is unlikely. Appendix 1: Tungsten and molybdenum quotes from Metal Week in the United States
Product name, market, specifications, and unit
March 16 March 23 March 30 April 6
Tungsten concentrate: Spot price, U.S. market, USD per ton-degree: 154–163 127–136 127–136 127–136
Ferrotungsten: U.S. market, USD per kilogram: 27–29 29–29.55 29–29.55 29–29.55
**Market, USD per kilogram: 27–28 26–27 26–27 23–25
APT: U.S. market, USD per short ton-degree: 163–182 158–167 158–167 158–167
**Market, USD per ton-degree: 220–230 220–230 220–230 210–220
Molybdenum oxide: Traders’ prices, USD per pound of molybdenum: 8.5–8.6 8.3–8.5 8–8.25 7.8–8.1
Ferromolybdenum: U.S. market, USD per pound of molybdenum: 9.4–9.7 9.2–9.3 8.8–8.95 8.6–9.2
European market, USD per kilogram of molybdenum: 21–21.5 20.5–21 19.9–20.5 19.5–20.2
**Market, USD per kilogram of molybdenum: 23–24 23–24 23–24 23–24
Spot price, CIF Japan, USD per kilogram of molybdenum: 21–23 21–23 21–23 21–22

Appendix 2: International market prices for tungsten products (MB)
Tungsten concentrate (USD per ton-degree); Ammonium paratungstate (Europe, USD per ton-degree); Ammonium paratungstate (U.S., USD per short ton-degree); Ferrotungsten (USD per kilogram)
1997 47.23 63.61 68.87 5.64
1998 44.17 54.87 59.56 6.44
1999 40.06 51.09 50.9 5.84
2000 44.88 59.89 59.58 5.68
2001 65.46 89.09 89.77 6.67
2002 38.09 53.73 65.3 5.88
2003 44.93 62.31 62.66 6.48
2004 50.58 83.468 80.599 10.07
2005 111 216.265 203.258 27.739
2006 154.933 256.998 258.964 31.544
2007 160 246.087 254.994 32.854
2008 159.17 246.55 252.08 33.233
Jan-07 160 249 250 33.14
Feb-07 160 258.5 254.375 33.76
Mar-07 160 260 256.667 33.83
Apr-07 160 257.143 260 32.5
May-07 160 250.667 260 33
Jun-07 160 245.556 260 32.45
Jul-07 160 239.125 260 31.2
Aug-07 160 236.3 258.889 31.5
Sep-07 160 241.75 250 33.85
Oct-07 160 243 250 33.6
Nov-07 160 240 250 32.92
Dec-07 160 232 250 32.5
Jan-08 160 233.2 250 33.18
Feb-08 160 239 250 36.45
Mar-08 160 255 250 38.48
Apr-08 160 252.222 250 35.61
May-08 160 250 250 35.73
Jun-08 160 245.56 250 36.15
Jul-08 160 251.44 255 35.09
Aug-08 160 252 255 34.37
Sep-08 160 252 255 33.38
Oct-08 160 250.54 255 32.64
Nov-08 160 245.625 255 23.55
Dec-08 150 232 250 24.17
Jan-09 140 210 250 27.44
Feb-09 140 210 221.25 29.5
Mar-09 140 210 200 26.54

Appendix 3: Statistics on APT exports by country in February 2009
Unit: Kilograms, USD
Product name; Quantity for the month; Cumulative quantity; Percentage change in cumulative quantity vs. same period last year; Average unit price; Cumulative total amount; Total value
159,700 292,820 -49.25 18.4 5,388,100
Japan 99,700 179,700 34.1 18.57 3,336,960
Netherlands 60,000 113,120 -60.99 18.13 2,051,140

Appendix 4: Statistics on ferrotungsten exports by country in February 2009
Unit: Kilograms, USD
Product name; Quantity for the month; Cumulative quantity; Percentage change in cumulative quantity vs. same period last year; Average unit price; Cumulative total amount; Total value
269,000 732,000 -20.62 20.24 14,818,123
Netherlands 248,000 511,000 -21.98 20.41 10,431,819
Japan 5,000 205,000 95.24 19.82 4,062,375
South Korea 13,000 13,000 41.46 20.58 267,560
Germany 3,000 3,000 200 18.79 56,369

Appendix 5: Statistics on tungsten ore imports by country in February 2009
Unit: Kilograms, USD
Product name; Quantity for the month; Cumulative quantity; Percentage change in cumulative quantity vs. same period last year; Average unit price; Cumulative total amount; Total value
812,698 1,550,634 10.76 9 13,952,863
Russian Federation 261,903 462,433 10.28 9.31 4,303,306
Canada 150,273 362,038 6.42 12.3 4,451,869
Vietnam 203,300 203,300 1,106.81 0.12 23,784
Rwanda 0 121,156 61.88 11.78 1,427,089
**Congo 117,383 117,383 – 10.24 1,202,135
North Korea 890 96,990 4,116.96 2.69 260,581
Thailand 40,114 66,544 -80.47 12.04 801,466
Brazil 18,223 55,936 – 10.72 599,646
Bolivia 20,612 41,779 73.18 14.15 591,091
Congo 0 23,075 -82.97 12.65 291,896