HK Stock Concept Tracker | Tungsten Prices Surge 2x Year-to-Date, Leading the Rally in Nonferrous Metals Sector (With Related Stocks)

Tungsten prices have surged materially year-to-date, with tungsten powder (≥99.7%) reaching RMB 1.01 million/ton as of Dec 18 (up 219.6% YTD) and domestic Wind data at RMB 1.045 million/ton, driven by large buyers raising long-term procurement prices and production cuts/shutdowns across the tungsten supply chain. CICC warns of persistent global supply deficits—primary production projected to rise from 82,800 tons in 2025 to 89,900 tons in 2028 versus demand rising from 102,100 to 110,000 tons—forecasting a long-term central price range of RMB 450,000–500,000/ton through 2028; forward-looking company data from Jiaxin International shows rapid ramp-up in ore processing and concentrate output with Phase II capacity targeted in 2027, underpinning bullish fundamentals for tungsten producers.

Analysis

Market structure: The immediate winners are upstream tungsten miners and high-purity processors (e.g., Jiaxin International Resources 03858) who gain pricing power as spot tungsten powder hit ~RMB1.01m/t (up ~220% YTD), while downstream users (cemented-carbide/toolmakers, certain aerospace suppliers) face margin squeeze. With CICC forecasting a multi-year supply deficit (2025 production 82.8k t vs demand 102.1k t) the pricing center is likely to be bid materially higher than historic averages through 2028, favoring asset owners of concentrated ore and integrated processors.

Risk assessment: Tail risks include Chinese regulatory interventions or strategic stockpile releases, rapid commissioning of overseas projects or large recycling initiatives that could collapse spot prices; probability low-medium but impact high. Timeframes: expect high volatility in days–weeks around contract resets and year-end cut announcements; structural tightness if prices remain >RMB450–500k/t for quarters, but overshoot reversal risk if prices reprice to CICC’s long-term central level or if demand destruction occurs from substitution.

Trade implications: Direct plays are long upstream equities and credit (small-cap miners, HK ticker 03858) and volatility trades via 3–9 month call spreads to cap carry; pair trades: long Jiaxin (03858) vs short downstream toolmakers (Kennametal KMT, Sandvik SAND) to isolate commodity beta. Macro impacts: higher tungsten spreads lift industrial input inflation — raise short-duration inflation hedges and reduce exposure to margin-sensitive industrials over 3–12 months.

Contrarian angles: The market may be underestimating supply responses — high prices will accelerate greenfield/scrap supply and substitution R&D, making current spot >RMB1m/t potentially short-lived; conversely if prices “anchor” long-term contracts near RMB450–500k/t, miners with low all‑in costs (target ~RMB49k/t for Jiaxin 2027) could deliver outsized free cash flow. Key thresholds: persistent price >RMB450k for 3 months = structural; drop <RMB300k = panic/liquidation opportunity.

Key Decisions for Investors

• Establish a 2–3% NAV long equity position in Jiaxin International Resources (HK:03858) within 30 days, using a staggered buy (50% now, 50% on 10–15% pullback). Place a hard stop-loss at 20% and target a 12–18 month horizon to capture Phase II capacity ramp and high price realization to achieve >2x upside if central prices hold above RMB450k/t.
• Construct a relative-value pair: long 03858 (2% NAV) vs short Kennametal (KMT US, 1% NAV) or Sandvik (SAND.SE, 1% NAV) to extract commodity-driven upside while hedging industrial demand risk; rebalance monthly and tighten short if tungsten prices breach RMB500k/t for >60 days.
• Buy 3–9 month call spreads on 03858 (buy 25–30-delta call, sell 45–50-delta call) sized to equal 1% NAV to express bullish exposure with capped premium; roll or unwind if tungsten spot <RMB300k/t or if Chinese policy directs inventory release.
• Reduce exposure to margin-sensitive downstream names (KMT, SAND, select aerospace suppliers) by 2–4% over next 90 days and redeploy into materials/mining ETFs or cash to mitigate input-inflation risk until 2 consecutive monthly price prints confirm mean reversion below RMB450k/t.
• Monitor three high-frequency triggers for active adjustments: (1) monthly tungsten concentrate prices (Wind/China Tungsten) — act if prints sustain >RMB450k or fall <RMB300k for two prints; (2) Chinese regulatory/stockpile announcements — close positions or hedge on release; (3) Jiaxin production reports (H2 2025 targets, Phase II start Q1 2027) — increase sizing if realized output meets guidance.