Sharp Tungsten Price Increase Analysis (III)

Tungsten Concentrate Cost Composition and Price Trend in Macro Aspect

Pricing Right — Tungsten Concentrate Price As International Strategic Curbing Method

It is said that semiconductor is the food of modern industry, rare earth is aginomoto, tungsten carbide as end product of tungsten is called teeth of modern industry. The importance of tungsten product in modern industry is obvious. We can say that tungsten product is necessary for a country to realize industrialization, urbanization, informatization and agricultural modernization.

Tungsten product as strategic material, has abundant reserve in China. Tungsten products have intimate relation with military, nuclear power, new energy, electric information industry and other emerging industry and strategic industry. China has advantage in reserve and basic metallurgic technology in tungsten, molybdenum and rare earth resource shall reflect its strategic position and function in international politics and economy.

China Has Paid High Cost for Economic Growth

International strategic theory and time prove that developed countries take political, economic and military method to slow down developing pace of developing countries to protect their strategic position and economic growth for their own interest.

China has been affected in the past thirty years’ of reform and opening up. Under instruction of chairman Deng Xiaoping’s diplomatic and military instruction, diplomacy and military development fell behind social and economic development, so it is affected by joint economy strategic attack from capitalist countries in the west. As long as we looking back to the price of refractory and non refractory metal price in the past thirteen years, especially raw materials price controlled by western countries, it will be clear how much China have paid for western resource price strategy. Copper, aluminum, lead, zinc, tin, nickel, iron and so on, the price all increase by several times. For petroleum resource and price, it raised from RMB 1.00/L to 7.00/L, it is clear that how much China have paid for economic development. Under such condition we almost complete railway, road and infrastructure construction for national modernization. Although we paid a lot of fund for it, we complete the overall construction by relative low price.

Discourse Power – China Should Take International Discourse Power of Tungsten Products

Western countries like USA curb resource price increasing during our developing process. China has become the world’s second large economic entity and has the biggest purchase power, plus its tungsten resource advantage, we should also use strategic method to plan tungsten resource and selling, avoid related rules of WOT, use tax revenue and environmental protection policy to adjust price, thus to elevate infrastructure construction cost of those emerging economic entity to solid our economic development position and get the worthwhile return for tungsten industry.

From this point of view, related administration departments, industrial association and enterprises in China should realize that as a strategic material, tungsten products not only has its value in economic, but also in politics. So we should gradually embody its strategic value on the international marketing price. We shall use industry policy like ‘Made in China 2025’ to accelerate tungsten product industrial upgrade and improve technique, reduce export of low-end and low added value products like tungstate, tungsten powder and easy sintered product. Instead, we shall take the international market with medium- and high-end products. At the same time, use labor cost, environmental cost and research cost to increase tungsten products international marketing price, promote the price of mining rights and resource tax, increase tungsten products price from its source to full play its strategic value on the price.

We can image that India, has the same large population as China, without high speed railway but a highway, need tungsten products and rare earth for its infrastructure construction, will have to pay a huge cost under the sharp price increase so as to reach the level we already at.

International Discourse Power for Tungsten Products Price

During the process of reform and opening up, ferro ore price increased and promote the cost of our infrastructure construction. The upward house price is a pain to all of us. The root cause is the discourse power of ferro mine and copper mine is controlled by western enterprises. Australia sells various minerals at high price to us, then buys warplane and submarine. Now they are declaring freedom of sailing in South China Sea with America, it seems that we have no other way for it.

During developing process of tungsten, molybdenum and rare earth industry in China, we have mine resource. We sell tungsten products to developed western countries. They argued when price is high. They act anti dumping when price is low. If we don’t sell, they will sue us to WTO. Rule is made by them and they have market, as well as international court.

However, we shouldn’t deserve that. We have tungsten resource but lack uniform strategy and mind. Instead, we sell it in low price to earn market. We have over 80% tungsten resource, international tungsten association is owned by western countries, how can we hope they will stand for us? We don’t realize strategic position and value of tungsten products in market and earn reasonable discourse power for ourselves. Otherwise our mining workers will get profit, our medium sized enterprises will have exporting license and quality for tungsten products. They are restricted by foreign market. However, some Japan-invest and Taiwan-invest enterprises can easily obtain our resource and import and export license of tungsten products.

Just a few days ago, America launched 301 special rules to pose sanction and restriction to China regardless of WTO related dispute solving regulation. In the past dozens of days, Japan follows America to pose sanction on Chinese enterprises who do business with North Korea regardless of huge trade volume in both side. In the past two months, India intruded Donglang area, which is an integrated part of Chinese land, regardless of friendship. Australia, who relies on exporting ferro ore, coal and carbon to China, declared it will sail in South China Sea with American Navy. That being the case, some countries has broken international trade codes and WTO trade rules, we can also take the opportunity to take some measures and defend for our legal and reasonable interest. We can take our advantageous position in economic area and resource to full play our strategic function.

From the above analysis we are aware that under the complex international political and economic situation, it is time for tungsten industry to adjust policy and increase price and become a strategic industry.

In the past several years of development, imported raw material price has doubled for several times. We are expecting that tungsten price will be several times compared to current price level along with national industry policy and strategy adjustment. We will analyze RMB price factor of tungsten price currency.

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