1. Molybdenum: China boasts abundant reserves, accounting for 40% of the global total, and is primarily used in steel production.

Global molybdenum resources are abundant. According to statistics, the world's molybdenum reserves amount to approximately 10 million tons, with major deposits concentrated in China and the Americas. The top four countries—China, the United States, Chile, and Peru—account for 86% of global reserves, indicating a relatively concentrated distribution. Among these, China holds 43% of the world’s total molybdenum reserves. China’s molybdenum resources are primarily located in regions such as Henan, Shaanxi, and Jilin; these three provinces account for 80% of China’s total reserves, with Henan being the richest in resources, holding 40% of the country’s total reserves.

Global distribution of molybdenum resources

Data source: Compiled from publicly available information

Distribution of Molybdenum Resources in China

Data source: Compiled from publicly available information

In recent years, global molybdenum production has remained relatively stable, hovering around 240,000 tons per year. Production is fairly concentrated, with the top five producers accounting for nearly 50% of global output. In 2015, global molybdenum metal production reached 246,000 tons, of which China produced 84,000 tons, representing more than 30% of the global total. As the steel industry has experienced a downturn and the growth rate of global crude steel production has slowed, molybdenum supply has consistently been in surplus. In 2015, global molybdenum metal consumption totaled 217,000 tons, resulting in an oversupply of 30,000 tons. Domestic molybdenum consumption was approximately 60,000 tons, with an oversupply of about 20,000 tons.

Molybdenum Production and Consumption (10,000 tons)

Data source: Compiled from publicly available information

In terms of molybdenum consumption, approximately 75% of global molybdenum products are used in the steel industry in the form of molybdenum ores such as molybdenum oxide or ferromolybdenum, while the remaining roughly 25% are employed in industries like molybdenum chemicals and molybdenum metal products. Molybdenum is utilized in various sectors including construction engineering, mechanical manufacturing, automobiles, shipbuilding, aerospace, oil pipelines and drilling platforms, as well as in the production of chemical products such as catalysts, pigments, and lubricants. In most of these application areas, there are no direct substitutes for molybdenum. Consequently, molybdenum consumption remains highly correlated with global crude steel production.

Molybdenum Consumption Structure (10,000 tons)

Data source: Compiled from publicly available information

Molybdenum Consumption vs. Crude Steel Consumption (10,000 tons)

Data source: Compiled from publicly available information

2. Tungsten: A strategic national resource, primarily used in cemented carbides.

According to statistics, the globally proven tungsten reserves amount to approximately 3.1 million tons, with the majority concentrated in China. China’s proven reserves stand at 1.9 million tons, accounting for about 61% of the global total. China’s tungsten resources are primarily located in regions such as Hunan, Jiangxi, and Henan; among these, Hunan holds the largest reserves, accounting for 45% of China’s total. Among China’s tungsten resources, scheelite reserves account for roughly 70% of the nation’s total tungsten ore reserves. Major scheelite deposits include the Shizhuyuan Tungsten-Tin-Bismuth-Molybdenum Polymetallic Mine in Chenzhou, the Sandaozhuang Molybdenum-Tungsten Mine in Luanchuan, and the Xintianling Tungsten-Tin-Bismuth-Molybdenum Polymetallic Mine in Chenzhou. Black tungsten ore reserves account for approximately 29% of the nation’s total tungsten ore reserves.

Global distribution of tungsten resources

Data source: Compiled from publicly available information

Distribution of Tungsten Resources in China

Data source: Compiled from publicly available information

Due to its exceptional physical properties—such as a high melting point, high hardness, high density, and excellent electrical and thermal conductivity—tungsten is widely used in fields including military industry, aerospace, mechanical processing, metallurgy, oil drilling, mining tools, electronic communications, and more. It is an irreplaceable strategic metal for both the national economy and modern defense industries. From the perspective of consumption structure, tungsten is primarily used to produce cemented carbides, tungsten steels, and tungsten-based materials. In developed countries, most of the tungsten is consumed in the production of cemented carbides, accounting for 72% of total tungsten consumption.

Tungsten Consumption Structure in Developed Countries

Data source: Compiled from publicly available information

China's Tungsten Consumption Structure

Data source: Compiled from publicly available information

According to available data, there are currently 27 active tungsten mines worldwide, with a combined refined tungsten concentrate production capacity of 113,000 tons. Of this total, China accounts for 80,000 tons. In 2015, China’s refined tungsten concentrate output was 72,000 tons, while global output stood at 85,000 tons. China’s output accounted for approximately 84% of the global total (calculated on the basis of 100% WO₃). The major domestic tungsten producers include Jiangxi Tungsten Industry Group Co., Ltd., Luoyang Molybdenum Industry, and Jiangxi Rare Earth & Tungsten Industry Group Co., Ltd. As tungsten is a strategic resource, the Chinese government has been implementing total-production controls on tungsten since 2002. In terms of consumption, the global demand for tungsten is concentrated primarily in China, Europe, the United States, and Japan. In 2015, China’s tungsten consumption reached 34,000 tons, accounting for roughly 50% of global consumption. However, in recent years, due to the generally weak recovery of the global economy, the overall growth rate of global tungsten consumption has been slowing down.

Tungsten Production and Consumption (10,000 tons)

Data source: Compiled from publicly available information

China’s Tungsten Production Control Target (in 10,000 tons, converted based on 100% WO3)

Data source: Compiled from publicly available information

3. Both tungsten and molybdenum are at price lows and are expected to rebound.

As the molybdenum industry continues to face a prolonged downturn in both domestic and international economic conditions, coupled with falling crude oil prices and a sluggish manufacturing sector, steel prices—both domestically and internationally—have continued to decline. Consequently, demand for molybdenum-containing steels has plummeted sharply. Moreover, with the gradual commissioning of new molybdenum mines both at home and abroad, the supply of molybdenum has kept rising steadily, further exacerbating the problem of overcapacity. As a result, since the financial crisis of 2008, molybdenum prices have been on a downward trend, reaching their lowest point in a decade—at 680 yuan per ton—in 2015.

Molybdenum prices have fallen below the cost line, yet they are now finding support. Statistical data on molybdenum production and consumption indicate that the oversupply in the molybdenum market continues to intensify. Moreover, given the prolonged period of low molybdenum prices, the proportion of low-cost byproduct molybdenum in the overall supply structure has been steadily increasing, putting significant downward pressure on molybdenum prices. However, in 2015, the price of molybdenum concentrate plummeted to as low as 680 yuan per ton, with an average annual price of 960 yuan per ton—marking the first time in nearly 12 years that the price has fallen below the cost line of China’s major molybdenum-producing mines. We believe that molybdenum prices will find support, leaving limited room for further declines.

Tungsten concentrate price trend (yuan/ton)

Data source: Compiled from publicly available information

Trend of molybdenum concentrate prices (yuan/ton-degree)

Data source: Compiled from publicly available information

With state stockpiling combined with industry-wide coordinated production cuts, tungsten prices are expected to rebound. Currently, tungsten prices are at a bottoming-out level. Since the beginning of this year, in order to stabilize tungsten prices, the state has planned to stockpile a total of 10,000 tons of tungsten concentrate, with the purchase price potentially exceeding 73,000 yuan per ton. Meanwhile, China’s tungsten industry also plans to implement coordinated production cuts in 2016, with tungsten concentrate output declining by 15% year-on-year. Key leading enterprises will collectively reduce their output by 10,000 tons. With both state stockpiling and industry-wide coordinated production cuts effectively controlling supply, tungsten prices will gradually begin to rebound.