On October 25, Cailian Press (Reporter Liang Xiangcai) reported that under the influence of factors such as the rise in tungsten prices and the pressure of raw material costs, China Tungsten and Hi-Tech Materials (000657.SZ) did not increase revenue in the first three quarters, but after the injection of the Shizhuyuan Tungsten Mine resources into the company this year, it will to some extent alleviate the pressure of insufficient raw materials.

Tonight, China Tungsten and Hi-Tech Materials released its financial report. In the first three quarters of this year, the company achieved revenue of 10.229 billion yuan, a year-on-year increase of 7.13%; net income attributable to the shareholders of the listed company was 0.206 billion yuan, a year-on-year decrease of 34.66%.

Regarding the reasons for the performance change, China Tungsten and Hi-Tech Materials mentioned in the third quarterly report that faced with blocked end-demand and a continuously shrinking hard alloy market, the company withstood market pressure, increased professional market promotion efforts, leading to a year-on-year growth in revenue; however, due to intensified industry competition and rising costs of raw materials and auxiliary materials, the overall gross margin of the company for January to September decreased by 1.31 percentage points to 14.86% from the same period last year.

Looking further, the company's sales expenses from January to September were 0.318 billion yuan, a 7.35% increase from the same period last year of 0.297 billion yuan, mainly due to increased efforts in professional market promotion, advertising, and business promotion expenses.

In addition, China Tungsten and Hi-Tech Materials increased its investment in research and development. Research and development expenses for January to September were 0.413 billion yuan, a 19.05% increase from the same period last year of 0.347 billion yuan.

This year, tungsten prices have shown a 'roller coaster' trend. Industry data shows that at the end of May, the price of black tungsten concentrate (grade ≥65%) (referred to as 'tungsten price') once reached 0.158 million yuan/ton, a new high in nearly ten years; thereafter, the tungsten price turned downwards, fell below 0.13 million yuan/ton by the end of July, then rose again. As of October 25, the tungsten price is 0.141 million yuan/ton, with a year-on-year increase of about 16%.

Behind the sharp fluctuations in tungsten prices is the fierce game between supply and demand. Recently, industry insiders told Cailian Press reporters that the tungsten raw material end is a seller's market, with a certain lag in transmitting price increases from upstream to downstream. In the first half of the year, the rapid rise in tungsten prices was mainly caused by factors such as the tightening supply sentiment at the mine end, while downstream demand was relatively weak, leading to erosion of profit margins.

It is reported that the self-sufficiency rates of raw materials for the three major tungsten enterprises in A-shares are relatively low, with Xiamen Tungsten and Chongyi Zhangyuan Tungsten self-sufficiency rates of 30% and 20% respectively. The raw materials of china tungsten and hightech materials basically come from the group mines it manages, and the insufficient part needs to be purchased externally. Therefore, the significant fluctuations in tungsten prices will to some extent disrupt the normal production rhythm of the companies.

It is worth mentioning that the actual controller of china tungsten and hightech materials, Minmetals Group, has five mines under its management. The Shizhuyuan mine, as the first mine injected into the company, had officially landed in the first half of the year. The company has publicly stated that Shizhuyuan holds reserves of 0.19 billion tons, including a tungsten metal amount of 0.56 million tons, accounting for over 30% of the national tungsten reserves, with the largest industrial recoverable reserves globally and currently producing over 7,000 tons of tungsten concentrate annually. The remaining four mines, Xintianling Tungsten, Xianglushan Tungsten, Yuanjing Tungsten, and Hunan Nonferrous Asset's equity in Hunan Yaogangxian Mining, the company has also committed to injecting them into the company when certain conditions are met.