Analysis of latest tungsten market from ChinaTungsten Online

Tungsten prices in China tend to stabilize this week after a fast decline in July. Manufacturers’ product profits are cut greatly and they appear unwilling to sale at present. A new round of environmental protection inspection will be launched on August 20 and insiders are in wait-and-see mood.

The latest prices of neodymium oxide, dysprosium oxide and praseodymium neodymium metal stabilize on Thursday August 16 in Chinese market. Affected by a new round of environmental checks, the relationship between supply and demand is in a stalemate, and market participants wait and see the outlook. Rare earth price will maintain stability in the short term without clear guides from the market. 

Chinese molybdenum prices retreated on limited new increased orders. Ferro molybdenum price slid from RMB 132,000 per ton to RMB 130,000 per ton. While ammonium heptamolvbdate price stabilized at RMB 128,000.00 per ton.

RMB exchange rate trend

Devaluation of RMB

Let’s look back the exchange rate of RMB. Last week, RMB closed at around 6.85 against the dollar, while it fell sharply on Monday's opening, opening at 6.86 and closing at about 6.87. 

Solution of tungsten, molybdenum and rare earth industry

The trade war is beneficial for the tungsten-molybdenum rare earth industry and a rare opportunity.

Future trend of RMB-Easy credit

According to the credit data published on last Friday, the amount of credit in July increased by 1.45 trillion, an increase of 323.7 billion RMB year-on-year.

On Saturday afternoon, China Bank Insurance Regulatory Commission has published a special article about “To enhance the supervision and guidance, open up the transmission mechanism of monetary policy, and improve the economic level of financial services”. This article stresses that the bank should increase the credit supply and loan support for small and medium-sized enterprises.

Obviously, the transformation from easy money to easy credit has been realized in July. As the scale of credit expands further, the decline of the general lending rate and the notes financing rate will further accelerate, and the economic will gradually be stabilized.

Reduction of interest

According to the statistics published by the Central Bank, it shows that money market interest rate has continued to fall in the past two months. Last week, the rate of bank overnight was 1.622%, and the interest rate on August 7th closed at 2.450%. Both fell compared to the same period last week.

Forecast of exchange rate trend

Since the exchange rate is regarded as the value of one country’s currency in relation to another currency. Therefore, we have to look at the recent actions of the dollar in order to analyze the trend of RMB:

1) Expansion of national debt scale

Due to the increase in the US social welfare and the military spending, monetary policy of the United States is relatively tight. On July 30th, the U.S. Treasury Department said that it expects the third quarter debt to be $56 billion higher than previously estimated amount. The total debt is $329 billion.

2)Increase of government bond interest rate

“In general, what we’ve seen is the Turkish lira deprecation significantly against the dollar ... Trade tensions have kind of kept Treasury in a range for some time,” said Charlie Ripley, senior market strategist for Allianz Investment Management. “We also kind of expected more upward pressure on Treasury yields with the increased auction sizes, but it seems every time it seems to be met with demand. It’s sort of a head-scratcher.” 

Moreover, according to the recent statistics, the Fed’s increase of interest rate in September is a high probability event.

Forecast of RMB exchange rate trend

Hence it is obvious that China and the US have taken different methods. China has loosened the monetary policy and lowered the interest rate. On the contrary, the US has tightened the money supply relatively and raised the interest rate moderately. Therefore, through the analyses from all aspects, we conclude that the trend of the continued depreciation of the RMB against the US dollar will not end in the short term.

Benefits of tungsten carbide cutters export

Different form the iPhone, the dealers of tungsten carbide cutting tools can get the most of the nonbusiness income caused by the devaluation of RMB. Because China owns absolute resource advantages such as tungsten, molybdenum and rare earth. 

Turkish lira crisis fueled by Trump

Last weekend, Donald Trump struck a vengeful note, announcing, “I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong our very strong Dollar!”

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Rare earth market quotation in China: domestic rare earth price maintains stability because listing prices of large enterprises, policy for purchasing and storage and current trading environment fail to give clear directions to the market. At present, the supply and demand is in a stalemate and manufacturer lower production activity.