CICC: Bull market logic is still strengthening, tungsten prices are expected to stabilize and rebound after a short-term sharp decline.

CICC released a research report stating that the emerging demand and strategic attributes of tungsten are increasing, while the tight supply situation remains unchanged. Domestic tungsten prices are expected to stabilize and rebound after a sharp decline in the short term, and the attractiveness of global tungsten industry leaders is becoming increasingly evident. In the long term, the global tungsten supply-demand shortage situation remains unchanged, and the value of global tungsten industry leaders continues to be highlighted. On the supply side, domestic tungsten supply continues to be tight, with Kazakhstan, South Korea, or Europe contributing to the incremental supply. Uncertainty in European increment is increasing. On the inventory side, domestic tungsten inventories increased slightly in the first quarter of 2026, but the increase was limited. Overseas replenishment demand remains urgent. Taking into account demand trends, the bank predicts a global tungsten supply-demand gap of 23/24/24/25 thousand tons from 2026 to 2029, accounting for 14.6%/14.8%/13.9%/14.3% of global tungsten usage (primary + secondary). CICC's main points are as follows: Price: From "overheating" to "overcooling", with signs of stabilization after a sharp decline. The bull market in tungsten prices started in 2025, with domestic tungsten concentrate prices rising from RMB 14.2/ton to RMB 45.6/ton by the end of the year, a cumulative increase of +221%. In 2026, domestic tungsten prices accelerated upward, breaking through RMB 1 million/ton in mid-March. However, since the Middle East conflict in February this year, the blockade of the Hormuz Strait and mutual attacks on energy facilities by warring parties have led to an unexpected rise in oil prices, exacerbating global economic stagflation fears. This has led to a reversal in the previously rapid rise in domestic tungsten prices, with a wave of selling in the industry chain and increased downstream wait-and-see sentiment. In May, domestic scheelite prices fell to a low of RMB 40,000/ton for the year, down 61% from the high in March. As of May 29, domestic tungsten prices had stabilized at RMB 41,600/ton. In the short term, factors suppressing tungsten prices are gradually easing, while the emerging demand and strategic attributes of tungsten continue to strengthen. First, the easing of the Middle East conflict has alleviated stagflation fears, and domestic holders have shown a reluctance to sell. Second, the accelerated demand from emerging industries such as AI is expected to drive the growth of AI PCB microdrill demand, with the booming storage industry driving the tight supply and demand of tungsten hexafluoride. Third, the importance of tungsten as a strategic key mineral is increasing globally. As of May 29, overseas scheelite and APT prices were 120% and more than 200% higher than domestic prices, respectively, both at historical highs. Risk Warning: Global tungsten supply exceeds expectations; project progress falls short of expectations; demand falls short of expectations.