(Report Producer/Analyst: Minmetals Securities, Qi Yan, Wang Xiaopeng)
1. Tungsten carbide is an important consumable in the manufacturing and mining industries
1.1 Tungsten carbide - "industrial teeth"
Cemented carbide is an alloy prepared by batching, wet grinding, spray granulation, pressing and molding, and high-temperature sintering with micron-scale refractory metal compound (WC, TaC, TiC, NbC) powder as the hard phase and transition group metal (Co, Fe, Ni) powder as the sintering binder phase.
Commonly used cemented carbides can be divided into tungsten cobalt, tungsten titanium cobalt, tungsten titanium tantalum (niobium) and so on according to their composition and performance characteristics.
Tungsten carbide is known as "industrial teeth" because of its high hardness, high strength, wear and corrosion resistance. In general, cemented carbide refers to an alloy with tungsten carbide as the hard phase and cobalt as the binding phase, which is widely used in various fields of industry because of its high hardness, high strength, good wear resistance and corrosion resistance, so it is called "industrial teeth".
Tungsten carbide can also be divided according to the grain size of tungsten carbide and its application field, and the grain size largely determines the performance and application field of tungsten carbide.
Generally speaking, the smaller the grain size, the higher the hardness and better wear resistance of cemented carbide, but at the same time, the toughness is reduced and the impact resistance is poor; the larger the grain size, the better the impact resistance and toughness of cemented carbide, and the hardness and wear resistance are reduced. Therefore, nanocrystalline, ultra-fine and sub-fine cemented carbide are widely used in cutting tools and other fields because of their high hardness, wear resistance and sharp cutting edges, etc.; fine and medium-crystal cemented carbide are mainly used in cutting tools and wear-resistant tools that require hardness and seismic strength; coarse and ultra-coarse cemented carbide have high impact resistance and toughness, and are mainly used in mining tools and other fields.
By controlling the grain size and cobalt content of tungsten carbide, it is possible to produce carbide tools for various applications. In addition to the size of tungsten carbide grains and the content of binder phases, which determine the characteristics of tungsten carbide materials, it is possible to produce tungsten carbide tools suitable for various fields.
1.2 High-end products are the development trend of the industry, and China still has room to catch up
In the course of 100 years of development, the products are moving towards the direction of high-end. Tungsten carbide has been developed for 100 years, and in the process of continuous development and growth, its application scenarios are also increasing, from the initial replacement of industrial diamonds to the replacement of high-speed steel, from the invention of indexable tools to the application of coating technology, and now cemented carbide has developed into the world's most widely used tool material. In the future, the development of cemented carbide and cutting tools will mainly focus on the following directions:
(1) Coating technology development route: a Diversification of coating system - through the development of diversified coating systems, higher hardness, better wear resistance, heat and oxidation resistance, adhesion resistance, impact resistance and other properties of the tool can be realized. b. Toughening of interface gradient - through the design of gradient structure between the cutter body and the surface structure of the coating, the interfacial adhesion force can be effectively improved, and the toughness can be significantly enhanced while improving the hardness of the tool. cFine structure modulation - through gradient modulation structure design, the external load response can be reduced and the surface hardness can be improved. dMicro-nano surface structure - by constructing a gradient structure of grain and crystal form gradient, the coating surface is harder and tougher overall.
(2) Refinement and gradient of cemented carbide grains: cemented carbide materials will continue to develop in the direction of ultra-fine grains and nanocrystals, and develop gradient cemented carbide, which can take into account the high strength and high toughness of the materials.
(3) Material composite development: combining two completely different materials together to form a composite of materials, many materials that could not be processed before can be processed.
In the future, the application field and market share of high-end cemented carbide and tool products will gradually expand, and the industry concentration will be more inclined to the head enterprises.
The development of cemented carbide in China is relatively late compared with foreign countries, and the output has jumped to the first place in the world after rapid development. In contrast, the development of China's cemented carbide industry started late, and has roughly experienced four stages of development since its inception:
The first stage: the embryonic period (1948-1958): in 1948, Dahua Electric Metallurgy was established, realizing the cemented carbide from scratch, during this period, the state set up powder metallurgy and other majors in colleges and universities in order to consolidate the demand for tungsten smelting and processing and cemented carbide talents in China.
The second stage: comprehensive layout to lay a solid foundation (1958-1978): In 1958, the 601 factory was put into operation, which opened the prelude to the rapid development of China's cemented carbide industry. By the 70s, there were 27 cemented carbide production enterprises in the country, with an annual production capacity of about 4,400 tons, about 50 kinds of grades, and more than 20,000 kinds of product models.
The third stage: technological transformation and growth (1979-2000): in order to narrow the gap with foreign countries, China imported about 1,000 sets of equipment and instruments from developed countries such as Sweden, Switzerland, the United States, Japan and Germany, involving tungsten concentrate smelting, powder preparation, alloy production, tool manufacturing, analysis and testing and other process links.
The technology and equipment level of China's major cemented carbide manufacturers have been greatly improved, so that the product variety, quantity and quality have been greatly improved.
After the reform and opening up, the cemented carbide industry has entered a new stage of development with the prosperity of China's market economy, showing a three-legged situation of foreign enterprises, state-owned enterprises and private enterprises, and market competition has gradually intensified. After the development of leading enterprises and small and medium-sized enterprises in the 90s, China has nearly 200 cemented carbide and tool manufacturers in 1999, and the output is directly at the 10,000-ton mark.
The fourth stage: self-reliance, self-improvement and high-quality development (2000-): After China's accession to the WTO, the strategic restructuring and internationalization of China's cemented carbide industry have also been accelerated, and the leading enterprises have actively carried out "industrial chain extension" - strengthening resource control to the upstream and developing high-end products to the downstream.
In 2010, China's annual output of cemented carbide reached 22,000 tons, of which the output of high-value-added CNC blades in cemented carbide products increased by 50% during the "Eleventh Five-Year Plan" period, and the proportion of high-end products increased significantly.
In 2021, the output of cemented carbide will reach 51,000 tons, of which the total output of cemented carbide in the world will be about 111,000 tons, and China will account for more than 40%, ranking first in the world.
The continuous increase in China's cemented carbide production and sales revenue is mainly due to:
First, the continuous improvement of industry technology and quality has led to the increasing market competitiveness of domestic cemented carbide products;
Second, with the continuous expansion of downstream application fields, the customer base is gradually diversified;
Thirdly, China's abundant tungsten ore reserves provide an important resource base for the development of the cemented carbide industry, according to data released by the United States Geological Survey (USGS), as of 2022, China's tungsten ore reserves account for about 47.37% of the world's total.
At present, China has developed into the largest producer of cemented carbide. However, due to the low proportion of deep processing and finishing, the cemented carbide industry as a whole presents a large but not strong situation.
1.3 The profitability of the industrial chain is in the form of a smile curve, and the pattern of cemented carbide links is relatively concentrated
In the cemented carbide industry chain, the upstream is the mining and smelting of metal compounds and powders such as tungsten and cobalt, and the middle and downstream are the production and manufacturing of cemented carbide and tools in the fields of mining, cutting and wear resistance.
At the same time, due to the fact that the cemented carbide matrix material has a great impact on the performance of downstream tools and the cost of raw materials in cemented carbide tools accounts for a relatively high proportion of the cost of raw materials in cemented carbide tools, downstream tool manufacturers have gradually extended to the field of midstream cemented carbide production, and the industrial chain generally shows a trend of integrated development of upstream and downstream.
Among them, the extension of the industrial chain is mostly expanded through independent research and development and vertical acquisition.
From the perspective of the profitability of the industrial chain, the industry chain as a whole presents a smile curve.
Tungsten mining is a resource monopoly industry, with high resource barriers, high gross profit margin close to 40%, and good profitability.
Downstream cemented carbide tools belong to a technology-intensive industry, with high technical barriers, brand barriers, customer barriers and capital barriers, with the highest gross profit margin and the best profitability. Tungsten carbide products have certain technical, customer and financial barriers, and the gross profit margin is relatively high by more than 20%. The other links belong to smelting and primary processing, with low barriers and overcapacity, resulting in poor profitability.
Upstream tungsten resources are important strategic metal resources, the level of comprehensive development and utilization of tungsten determines the level of national security and scientific and technological development, the European Union, the United States, the United Kingdom, Canada, Japan and other countries have included tungsten in the list of the most important strategic critical metals. According to the data of the United States Geological Survey, China's tungsten reserves in 2022 will be 1.8 million tons, accounting for about 47.37% of the world's total reserves, ranking first in the world. According to the statistics of the Ministry of Natural Resources, in 2020, the identified tungsten reserves of seven provinces (regions) of Jiangxi, Hunan, Henan, Fujian, Gansu, Xinjiang and Yunnan accounted for about 97.5% of the country's total reserves, with Jiangxi accounting for 52% and Hunan accounting for 24.9%.
The pattern of the cemented carbide industry is relatively concentrated, and most of the leading enterprises are the leaders who master the upstream tungsten resources.
Referring to the output of cemented carbide manufacturers in 2021 disclosed in the prospectus (declaration draft) of Changying Hardcore, we will roughly divide the cemented carbide industry enterprises into three echelons: the first echelon is the enterprises with an annual output of more than 5,000 tons, mainly Chinatungsten High-tech and Xiamen Tungsten Industry, and the second echelon is the enterprises with an annual output of 1,000 tons to 5,000 tons, mainly Oukeyi, Changying Hardcore, Penglai Superhard Composites, Zhejiang Dewei Cemented Carbide, Jinan Institute of Metallurgical Science (a wholly-owned subsidiary of Tongyu Heavy Industry), Zhuzhou Seiko cemented carbide, Xinrui shares, Zhangyuan tungsten industry, etc., the third echelon is the annual output of less than 1,000 tons of enterprises. Among them, the top two leading tungsten resource enterprises have a total market share of 39.05%, and the top eight companies have a total market share of 58.44%, showing a relatively concentrated market competition pattern.
1.4 Policies continue to be introduced to escort the rapid development of the industry
As a new material industry in China's strategic emerging industries, the development level of the cemented carbide industry plays a vital role in the development of China's high-end manufacturing industries such as aerospace, marine engineering, CNC machine tools, rail transit, nuclear engineering, new energy, advanced medical equipment, environmental protection and energy-saving equipment. In recent years, the state has continued to introduce policies to maintain encouragement and support for the development of the cemented carbide industry.
2. Deep processing is becoming more and more sophisticated, and cemented carbide has a great future
The scale of China's cemented carbide industry has jumped to the first place in the world, but it is still in a state of large but not strong. Foreign cemented carbide leading enterprises are often also large tool manufacturers, which is conducive to the research and development of cemented carbide tool products. However, due to the historical planned economic system in China, cemented carbide production and tool manufacturing are managed by metallurgical and mechanical systems, which leads to the disconnection between the production of alloy materials and tools, which seriously affects the development of cemented carbide tools and deep processing supporting products. Due to the long-term separation of cemented carbide production and downstream tool manufacturing, the competitiveness of domestic cemented carbide tool and die manufacturing enterprises is insufficient.
The downstream of the cemented carbide industry is mainly for cutting tools, mining tools and wear-resistant tools. The downstream of the cemented carbide industry is mainly for cutting tools, mining tools and wear-resistant tools. Among them, cutting tools accounted for the highest 45%, followed by wear-resistant tools accounted for 27%, and mining tools accounted for 25%. There are great differences in the development opportunities and market space faced by different types of cemented carbide.
2.1 Cutting tools: the proportion of cemented carbide tools has increased, and high-end products have accelerated their breakthrough
2.1.1 Benefiting from the development of numerical control of machine tools, the proportion of cemented carbide in the tool material continues to increase
The tool is the tooth of the machine tool and plays a pivotal role in machining.
A machine tool is a machine that processes a blank or workpiece of metal or other materials into a machine that requires geometric shape, dimensional accuracy, and surface quality, in short, a machine that manufactures a machine, also known as an industrial machine tool.
Cutting tools usually refer to machine tools, as the "teeth" of industrial machine tools, and are one of the most important core components of various machine tools.
The tool belongs to the manufacturing consumables, although the tool cost only accounts for about 3% of the production cost, but the cutting time accounts for about 70% of the entire processing time, the use of high-end cemented carbide cutting tools can improve the processing efficiency by at least 20%, reduce the processing cost by 15%, and occupy a pivotal position in machining.
Tungsten carbide is one of the commonly used materials for cutting tools.
Cutting tool alloys are mainly used in cemented carbide tools, including milling tools, turning tools, drilling tools and boring tools, etc., as an important part of machine tools, they are widely used in key manufacturing areas such as automobile manufacturing, mold processing, construction machinery and aerospace.
In machining, the cutting performance of the tool material is one of the key factors that determine the machining efficiency, machining quality and machining cost. At present, the commonly used cutting tool materials mainly include high-speed steel, cemented carbide, ceramics, cubic boron nitride and diamond.
The proportion of tungsten carbide in the application of tool materials has increased significantly.
According to the "Fifth Cutting Tool User Survey and Analysis Report" released by Metalworking Magazine in 2023, cemented carbide won the first place in the tool material market with a market share of 63.08%, an increase of 10pct compared with the fourth share, followed by high-speed steel with 20%, cubic boron nitride with 7.15%, diamond with 5.6%, and ceramics with 4.17%.
From the trend point of view, cemented carbide materials are more widely used in CNC machine tools due to their high hardness, high bending strength and toughness, high wear resistance and cost-effective characteristics, and are more ideal CNC tools.
In recent years, benefiting from the high-end transformation and development of China's manufacturing industry, the numerical control rate of China's machine tools has achieved a rapid increase, and the cemented carbide tool market has also shown a rapid growth trend.
According to the data of Neway CNC prospectus, the numerical control rate of machine tools in developed countries is generally very high: 90%+ in Japan, 80%+ in the United States, and 75%+ in Germany; as of 2022, although the numerical control rate of China's machine tools has exceeded 43%, there is still a lot of room for improvement in the numerical control rate of China's machine tools in the future compared with developed countries, and the demand and proportion of China's cemented carbide tools are expected to continue to increase.
2.1.2 The substitution space of the high-end tool market exceeds 10 billion, and the competitiveness of domestic tools is increasing
The growth rate of China's tool consumption market outperforms the world, and there is still room for improvement in the future. According to the disclosure of Sinovel Precision's prospectus, the global tool consumption market is mainly concentrated in China, the United States, Germany, South Korea, Japan and other countries.
Since 2010, the growth rate of the Asian tool market represented by China has ranked first in the growth of the global tool scale, which is 2.5 times the global growth rate.
From 2016 to 2020, the global cutting tool market increased from US$33.1 billion to US$37 billion, with a CAGR of 2.82%, compared with the growth of China's cutting tool market from 32.15 billion yuan to 44.6 billion yuan in the same period, with a CAGR of 8.53%, far better than the global market performance.
From the perspective of the proportion of tool consumption in machine tool consumption, as of 2022, China's tool consumption accounts for 25.17% of machine tool consumption, compared with the annual proportion of about 50% in developed countries, China's tool consumption market still has a lot of room for improvement.
The performance of some domestic tool products has been able to keep pace with similar foreign products. Cutting performance can be measured from four dimensions: cutting force, cutting effect, wear performance and surface quality of the workpiece.
In recent years, the head tool enterprises represented by Zhuzhou Diamond, Oukeyi and Huarui Precision have continued to make breakthroughs in technical research, and the performance of medium and high-end tool products has continued to improve, and some products have been able to keep pace with Japanese and Korean brands.
With the high-end transformation of China's manufacturing industry, the consumption demand for imported high-end tools is strong, from 3.6 billion yuan in 2005 to a peak of 14.8 billion yuan in 2018.
As of 2022, China's consumption of imported knives has dropped to 12.6 billion yuan, accounting for 27.16% of tool consumption, down 10.1pct from the peak in 16 years, but the substitution space still exceeds 10 billion yuan.
High-end tools such as blades and milling cutters are still more dependent on imports, and tools such as drills, circular saw blades, and interchange tools have opened up overseas markets.
In 2022, China's tool import scale will be 12.8 billion yuan, a year-on-year decrease of 8%, of which the categories with an import scale of more than 1 billion yuan are: 4.37 billion blades, 1.21 billion milling cutters, 1.05 billion drill bits, and 1.04 billion tapping tools, highlighting that the domestic manufacturing industry still needs to rely heavily on imports in the high-end fields of blades, milling cutters and other products, and domestic tool companies still have a lot of room to catch up in related fields.
In 2022, China's tool export scale will be 23.2 billion yuan, a year-on-year increase of 2.98%, of which the categories with an export scale of more than 1 billion yuan are: drill bits 8.56 billion, circular saw blades 4.58 billion, interchange tools 2.67 billion, blades 2.15 billion, and milling cutters 1.77 billion, indicating that Chinese tool enterprises have made breakthroughs in the fields of drill bits, circular saw blades, and interchange tools and successfully opened the international market.
At present, although the volume of imported blades is large, the import and export ratio has shown a significant decline.
According to the Machine Tool Industry Association, the ratio of China's cemented carbide insert imports to exports decreased from 3.4 in 2019 to 1.5 in 2023H1. From 2019 to 2022, the high-end trend of domestic blade products has brought about a rise in the volume and price of export products, of which the export volume of coated blades has increased by 50%, the export unit price has increased by 18%, and the export unit price of uncoated cemented carbide blades has increased by 40%. The sum of the domestic imported tool market and the overseas tool market exceeds 200 billion, which will continue to promote the import substitution and overseas process of domestic tools.
2.1.33C titanium alloy application, good for the development of cemented carbide tools
Titanium is not commonly found in mobile phones, and the narrowing of functional innovation has helped titanium to take off. Although titanium itself is not a rare metal, it is not commonly used in the field of mobile phones due to its high cost and difficult processing characteristics, which are not conducive to the use of consumer products. However, with the narrowing of smart phone function innovation, material innovation has begun to become the focus of attention of major mobile phone manufacturers, and the "titanium" force has risen with the trend.
Titanium alloy has the advantages of high specific strength, high thermal strength and good corrosion resistance, and has many applications in non-consumer fields. Titanium alloy materials have the performance advantages of high specific strength, high thermal strength and good corrosion resistance, and are widely used in aerospace, weapons and equipment, petrochemical industry and biomedical fields.
Titanium alloys are typically difficult to machine. However, because titanium alloy has the characteristics of large friction coefficient, low thermal conductivity, high chemical activity at high temperature and small elastic modulus, etc., it is easy to appear in the cutting process such as high cutting temperature, cutting deformation, serious cold hard phenomenon, vibrating knife and sticky knife, etc., resulting in easy tool chipping, fast wear, short life and poor surface quality of the workpiece, so titanium alloy is a typical difficult-to-machine material.
Severe tool wear is a major problem in the machining of titanium alloys, which leads to an exponential increase in tool consumption. Under normal circumstances, the life of the cemented carbide end mill is 120~180min when roughing, and when machining titanium alloy, the life of the cemented carbide tool is only about 30min in the case of low-speed cutting, and if the cutting speed exceeds 80~100m/min, the durability of the cemented carbide tool does not exceed 15min.
In order to achieve high-quality and efficient cutting of titanium alloy components, it is necessary to scientifically design and develop high-performance cutting tools, including tool material and tool structure design, tool coating preparation, tool cutting parameter optimization, tool processing status monitoring and cutting database development.
(1) Selection of tool materials: titanium alloy cutting processing is mainly based on cemented carbide tools.
In terms of material, it is generally believed that titanium-containing cemented carbide will have a strong affinity with titanium alloy, and YG cemented carbide is often selected as the tool material. In terms of grain size, when the average size of WC grain is 0.8~1.4μm, tungsten cobalt cemented carbide tools show good anti-wear performance.
(2) The development of coating tools suitable for titanium alloy processing will help improve machining efficiency and prolong tool life.
By comparing the high-speed milling performance of titanium alloy with physical vapor deposition PVD coated (TiN+TiAlN) cemented carbide tools and chemical vapor deposition CVD coated (TiN+Al2O3+TiCN) cemented carbide tools, it is found that the service life of PVD-coated tools is greater than that of CVD-coated tools, and it shows better cutting performance.
(3) The improvement of tool material is the main line of tool technology development, and improving cutting performance through tool geometric design is also an effective way to improve cutting efficiency and processing quality.
For example, Walter's M4002 high-feed milling cutter has a wavy design for the flank of the inserts, which increases the cutting quality of titanium alloys and increases tool life by a factor of two. The new full-edge cutting edge designed by Noble Seiko adopts a triangular slope geometry design, which can realize the vibration-resistant high-feed machining of titanium alloy, with 3 times higher efficiency and 50% longer life.
(4) The cutting database is a data-based management tool that uses computer technology to store tool and processing process data, and quickly obtains the tool information and cutting parameters required in specific processing scenarios according to production needs. Further integration of the cutting database system with CAM software can provide cutting data quickly and accurately for CNC programming, which is conducive to shortening the manufacturing cycle and improving the market competitiveness of products. The world's major developed countries have their own cutting databases - the United States Cutdata, Germany Infos, Sweden Coromant cutting database.
(5) Intelligent monitoring of the tool cutting process is a key technology to achieve intelligent manufacturing. The development of effective tool processing status monitoring technology is of great significance for realizing the automatic operation of the cutting process, ensuring the processing quality of parts, protecting the safety of machine tools and equipment, and improving the intelligent level of the production workshop. Realizing the multi-dimensional interaction between tool status monitoring and CNC machining system, so as to actively adjust the processing parameters and give full play to the working efficiency of tools and machine tools, will be the development trend of intelligent tools and intelligent manufacturing in the future.
With the gradual application of titanium alloy in the field of 3C, higher requirements have been put forward for the material preparation, structural design, coating preparation, cutting database and tool monitoring of tool enterprises.
2.2 Mining tools: the demand is stable, and the products can be expected to go overseas
Mining tool alloys are mainly used in the manufacture of tools in the fields of energy and mineral extraction and infrastructure construction.
Mining cemented carbide tools mainly include rock drilling tools, mining tools and exploration tools, including cone bits, top hammer impact drilling tools, down-the-hole impact drilling tools, reverse raiseboring drilling tools and coal cutter picks, etc., according to the data of the China Steel Structure Association Brazing Steel Drilling Tools Branch, as of the end of 2020, the product output value of China's brazing steel brazing tools industry is about 10.3 billion yuan, of which drill bit products account for about 60%, and the annual consumption of tungsten carbide cemented carbide exceeds 10,000 tons, with a market value of more than 3 billion yuan.
The market size of mining tungsten carbide tools fluctuates with the fluctuation of mineral resources, energy extraction, and infrastructure construction investment.
In recent years, China's industrialization and urbanization level has been continuously improved, construction, transportation, water conservancy and other infrastructure construction have continued to invest, and the demand for energy and minerals has continued to grow, which has led to the increase in demand for mining cemented carbide tools.
Mineral resources mining: mineral resources mining mainly uses cone drill bits, top hammer impact drilling tools, down-the-hole impact drilling tools and other rock drilling tools, in the process of mineral mining, usually according to the type of rock formation, mining depth and other factors to determine the appropriate tool type. The mineral resource extraction industry is a cyclical industry, and its mining volume fluctuates with international market demand and metal price fluctuations.
Oil drilling: oil drilling and production is an important application market for mining cemented carbide tools, the drill bit is the key working components and consumables used in oil drilling, and the main component of the drill bit is cemented carbide or polycrystalline diamond composite sheet with ultra-high hardness, which is used to cut (scrape) and drill the rock in deep oil drilling.
Coal mining: Coal mining is mainly carried out by shearers, the cutting part of the shearer is equipped with picks, and the cutting part rotates to form the impact of the picks on the coal body to make the coal pieces fall off. The main material of the pick is cemented carbide. Since 2010, global coal production has fluctuated cyclically. As the world's largest coal producer, China's coal output fell by 335 million tons in 2016 compared with 2015 due to a series of policy effects such as optimizing the structure of the coal industry and removing backward production capacity, resulting in a significant decline in global coal production.
Infrastructure construction: In recent years, mining cemented carbide tools have been widely used in the field of infrastructure construction, such as water well cone bits for the development of water wells and geothermal wells, rotary cone bits for bridge pile foundation engineering, trenchless cone bits for horizontal directional crossing projects, etc. With the advancement of the "Belt and Road" construction, the increase in infrastructure investment provides new opportunities for the development of the industry.
Global iron ore production has increased steadily. Since 2010, the global and Chinese iron ore mining volume has shown a steady and increasing trend, with a global CAGR of 2.59% from 2010 to 2021. The increase in iron ore mining has directly driven the market demand for mining cemented carbide tools such as rock drilling tools, thereby further driving the market demand for mining cemented carbide.
Global oil production has remained largely stable. Since 2010, the global oil industry has shown a steady development trend, and oil production has basically remained stable, with a CAGR of 0.86% from 2010 to 2022.
China's coal industry's backward production capacity has been cleared, driving global coal production growth. Since 2017, China's coal production has been on the rise year by year due to the phased achievement of the coal industry's backward capacity clean-up target and the orderly launch of new high-quality production capacity, driving the rise of global coal production. Global coal production CAGR 2016-2022 is 2.76%.
The gradual increase in the urbanization rate of the Chinese population has led to the rapid growth of infrastructure construction investment. As of the end of 2022, China's urban population was 920 million, with an urbanization rate of 65.22%, and as the urban population grew, the demand for infrastructure continued to increase.
In 2022, the national fixed investment in infrastructure construction will be 21.04 trillion yuan, a year-on-year increase of 11.52%, and the average annual compound growth rate of fixed investment in national infrastructure construction since 2010 will be 10.34%, maintaining a rapid growth momentum.
In recent years, the prosperity of mineral and energy exploitation and the vigorous development of major basic projects in the world have directly promoted the wide use and development of cemented carbide rock drilling products and supporting tools such as high-performance cemented carbide ball teeth, coal cutting teeth, planer and milling teeth, and the market demand has exceeded 10 billion US dollars.
Excellent product strength has laid a solid foundation for domestic enterprises to enter the global market. The detection indexes of mining cemented carbide tools mainly include density, hardness, coercive magnetic force, magnetic saturation, porosity and non-synthetic carbon, etc. Foreign advanced manufacturers in this field mainly include Sandvik and Atlas and so on.
Some grades of domestic mining tool alloy products have similar physical and chemical properties to similar products of foreign advanced manufacturers, and the product strength is not inferior to overseas leaders, laying a solid foundation for China's mining cemented carbide and tools to go overseas.
2.3 Wear-resistant tools: Tungsten carbide molds and wear-resistant parts have grown steadily
Wear-resistant tool alloy is the use of cemented carbide's high bending strength, high compressive strength, corrosion resistance and other characteristics, it is made into molds or wear-resistant parts, mainly used for the production of wire drawing dies, cold heading dies, hot and cold extrusion dies, forming dies and other molds, as well as valve products, nozzles, sealing rings, guide rails, plungers, balls and other parts, can improve the service life of molds and wear-resistant parts several times or even dozens of times. At present, the terminal application of wear-resistant tool alloys has covered consumer electronics, equipment manufacturing, automobile manufacturing and other fields.
Cemented carbide will accelerate its application in the field of molds and seize part of the die steel market. According to the data and forecast of Zhiyan Consulting, the demand for cemented carbide in the mold field has increased from 739 million yuan in 2015 to 1.591 billion yuan in 2021, with an average annual compound growth rate of 13.63%, and is expected to reach 2.497 billion yuan in 2026, and the demand for cemented carbide in the field of wear-resistant parts has increased from 3.707 billion yuan in 2015 to 7.912 billion yuan in 2021, with an average annual compound growth rate of 13.47%, and is expected to reach 12.119 billion yuan in 2026.
3. Domestic "hard force" cadres
3.1 Chinatungsten High-tech: Cutting tools + micro drilling + cemented carbide are stable, and the main valuation of the mine injection chain is reshaped
Chinatungsten High-tech Co., Ltd., formerly known as Hainan Jinhai Co., Ltd., was established in 1993 and landed on the Shenzhen Stock Exchange in 1996; In 2000, it absorbed high-quality assets and changed its name to Chinatungsten High-tech Materials Co., Ltd.; in 2006, Hunan Nonferrous Metals increased its stake in Chinatungsten High-tech and became the largest shareholder; in 2009, Minmetals Group became the actual controller of the company by holding Hunan Nonferrous Metals; in 2013, Minmetals Group injected high-quality assets into the company, and the company held 100% of the company's hard at that time In 2016, the company managed the mining and smelting enterprises of Minmetals, and became a cemented carbide enterprise integrating mining, smelting and alloy industry chain. The main business of Chinatungsten High-tech and related subsidiaries mainly include: cutting tools - Zhuzhuan and Great Wall, micro drill - Jinzhou, cemented carbide - Zhuhard, self-hardening and Nanhard.
Zhuzuan - the domestic CNC tool leader, the pioneer of the overall solution.
Zhuzhou Diamond can provide a variety of standard and non-standard physical coatings, chemical coatings, cermet and superhard material grades of high-precision turning, milling, drilling, parting, grooving and thread reaming CNC inserts and supporting tools, carbide integral tools and tooling systems. The annual operating income exceeds 2 billion yuan, and the net profit exceeds 300 million yuan. Through years of accumulation in the field of cutting tools, Zhuzuan has launched solutions for the main components of aircraft such as titanium alloy A-beams, brackets, high-alloy steel landing gear, composite wing fuselages and aluminum alloy doors in the aviation industry.
At present, there are more than 100,000 kinds of cutting tools, including 50,000 kinds of CNC blades, with an existing production capacity of 120 million tools, and a total planned production capacity of 200 million pieces during the "14th Five-Year Plan" period. Based on years of experience in tools, the company has also developed a tool supporting case library and a digital tool library, which has a certain leading advantage in the overall solution provider.
Hard--start from responsibility, based on innovation, and become hard work. Zhuzhou Cemented Carbide Group Co., Ltd. began to build a factory in 1954, which was one of the 156 key projects built during the national "First Five-Year Plan" period, and provoked the development of cemented carbide in China.
The company has undertaken a large number of major scientific and technological projects such as the national "863" and "973" plan projects, the national innovation capacity building project, the national science and technology support plan, as well as the national strategic innovation products and key new product projects, and a number of scientific research achievements have reached the international advanced level, and won more than 40 honors and awards at or above the provincial and ministerial level.
The company has 848 valid patents, including 385 invention patents. In the past 10 years, 85 national standards and industry standards have been compiled and revised. It has become the backbone enterprise of cemented carbide production, scientific research, operation and export in China.
At present, the company's cemented carbide products mainly cover special-shaped, drills, profiles, molds, powders, rolls, top hammers, molds, drilling tools and so on.
Golden State - keep improving, take the lead.
Founded in 1986, Jinzhou Precision Technology Co., Ltd. is one of the world's leading national high-tech enterprises in the design and production of cemented carbide drills, milling cutters and special precision tools for printed boards. At present, it has 241 patents, and has drafted national and group standards such as "Cemented Carbide Drill Bits for Printed Circuit Boards" and "General Specifications for Cemented Carbide Milling Cutters for Printed Circuit Boards". In the field of PCB micro drilling, the company has developed an ultra-fine drill bit with a diameter of 0.01mm, becoming the only company in the world with this technology on a par with Japan Youneng.
The imminent injection of mine assets will reshape the valuation of the tungsten chain.
From the perspective of the profitability of the industrial chain, the profitability of tungsten mining in the entire cemented carbide industry chain is second only to the cutting tool link, and it has the attribute of natural resource barriers, which is a veritable good business. The company has hosted five tungsten mining enterprises of Minmetals Group, including Persimmon Zhuyuan, Yaogangxian Mining, Xianglushan Tungsten, Xintianling Tungsten and Envision Tungsten, and the five mines entrusted to manage are currently operating normally, and the compliance issues are gradually sorted out and solved.
3.2 Xiamen tungsten industry: strong material strength, domestic leading hard tools
Xiamen Tungsten Co., Ltd., formerly known as Xiamen Alumina Plant established in 1958, switched to tungsten products in 1982, restructured into Xiamen Tungsten Co., Ltd. in 1997, and listed on the Shanghai Stock Exchange in 2002. The company's business involves tungsten, molybdenum, rare earth, new energy materials and real estate, and is one of the first batch of national demonstration enterprises for the development of circular economy, and one of the leading enterprises of large-scale rare earth enterprise groups established by the state.
In the field of tungsten and molybdenum, it has built a whole industrial chain of tungsten mining, tungsten and molybdenum smelting, processing and application, and a number of technologies are internationally leading; in the field of rare earths, it has established a complete system including rare earth mining, smelting, application and R&D, and set up a model of rare earth development model driven by deep processing; in the field of new energy materials, it has cultivated the R&D and large-scale manufacturing capabilities of mainstream lithium-ion cathode materials including ternary materials, lithium cobalt oxide, lithium iron phosphate, lithium manganese oxide, etc., and has become a first-class supplier in the field of lithium battery cathode materials. The main business entities of the company's cemented carbide and cutting tools are Xiamen Golden Heron, Luoyang Golden Heron and Jiujiang Golden Heron.
R&D is based on IPD mode, and continues to create new cutting tools.
In 2018, the company launched the IPD integrated development model, relying on the IPD product management system, building a market-oriented continuous product innovation ability, and establishing a good cooperation mechanism with more than 20 domestic and foreign universities and research institutes to promote the positive research and development of products.
At present, the company's cutting tool division has a R&D service team of more than 400 people, and has built four common technology platforms internally: matrix material preparation technology, knife design technology, coating technology and cutting application technology, overcoming technical problems, and developing new products through the combination of common technologies, with at least 3 new product series and more than 1,000 products launched every year. At present, Xiamen Golden Egret has more than 260 patents and more than 86,000 kinds of knives.
In 2022, the company established a solution center with processing and testing in Chengdu, which has the comprehensive ability to realize tool development, process programming, process simulation and part trial production, and has launched solutions for more than 60 parts such as impeller blisks, titanium alloy bone joints, automotive steering knuckles and mobile phone camera rings.
The "Silver Sparrow" series was released, and the titanium alloy processing technology was raised to a higher level. On October 26, Xiamen Golden Egret released the latest knife product "Silver Sparrow" series, which adopts a unique silver-white anti-adhesion coating on the surface of the knife, which greatly improves the service life of competing tools in the same industry, and has a better anti-chipping effect. This series of tools is mainly used for the machining of titanium alloy components in the aerospace, energy, 3C and medical industries.
Jianfeng aims at the imported tool market and plans to increase and expand the production capacity of cutting tools. In terms of production capacity, the company currently has a production capacity of 60 million indexable inserts, 10 million integral tools and 1.7 million superhard tools.
After the completion of the construction, the company will add 30 million indexable blades, 2 million overall tool production capacity and 1.7 million superhard tool production capacity, and the product application is mainly for aerospace, general machinery, new energy and medical fields.
3.3 Sinovel Precision: With CNC tools as the spear, PVD coating takes the lead in helping 3C titanium processing tools make rapid breakthroughs
Founded in March 2007 and listed on the Science and Technology Innovation Board in February 2021, Zhuzhou Huarui Precision Tools Co., Ltd. is a well-known manufacturer of tungsten carbide CNC tools in China. At present, the company's main business mainly includes CNC tools such as turning blades, milling blades and drilling blades, and the production and sales of CNC tools rank among the top three domestic manufacturers.
The company's technical personnel have deep accumulation in the field of cemented carbide tools. Many technical executives of the company have held important positions in Factory 601 (now Zhuzhou Cemented Carbide Group), and some of them have gone to Sandvik in Sweden for training and Xi, participated in the introduction of the first cemented carbide CNC blade production line in China, and have a deep understanding of core technologies such as material research and development, tool structure research and development, production process, coating technology and other core technologies of CNC tools, and master many related knowhow.
Both the IPO and convertible bond fundraising projects have been put into production, and the promotion of the solid carbide tool and cutter body project will support the company to move towards an overall solution service provider.
The company's IPO raised and invested 30 million pieces of cemented carbide CNC blades, 5 million pieces of cermet CNC blades, and 2 million pieces of cemented carbide integral tools. Convertible bonds raised 500,000 new CNC cutter bodies and 1.4 million solid carbide drilling tools. The IPO and convertible bond fundraising projects have been put into operation, the company's production capacity reserves are sufficient, new product categories have been launched one after another, and the perfect layout of the whole hard tool and cutter body business will support the company to further move towards an overall solution service provider.
Sinovel Precision has a deep accumulation in PVD coating technology, and its research projects are aimed at difficult-to-process materials such as titanium. As of 2023H1, the company has successfully developed 14 nano coating materials and 28 coating processes in PVD coating. Its self-developed AlTiN/AlTiSiN/TiSiN gradient composite nano coating can increase the life of the blade by more than 20% compared with the conventional AlTiN single-layer structure.
At present, the company's coating development for cutting tools for aviation difficult-to-machine materials mainly focuses on the material modification research of cemented carbide tool PVD coating AlTiN and AlCrN, and has accumulated a large number of basic research and test data.
For the development of high-precision 3C industry tool projects, we have completed the development of some 3C arc cutters, flat-head cutters, chamfering knives, T-shaped cutters, high-gloss knives and forming tools with titanium alloy as the core.
3C titanium alloy tools have entered Apple's supply chain, and the fundraising and production capacity has been put into production to help the performance continue to be realized.
In the third quarter, the company has cut into the Apple supply chain through dealers, and user feedback is good for the use of tools, and the third quarter of 3C tools achieved a revenue of 10 million yuan, all of which are titanium alloy processing tools.
The company's IPO raised and invested in the overall cemented carbide tool production capacity of 2 million, convertible bonds raised and invested in the overall carbide tool production capacity of 1.4 million, and the fund-raising projects have reached production, with a total production capacity of 3.4 million pieces / year. At present, the company's capacity utilization rate of hard tools is less than 35%, and the capacity utilization rate of hard tools will benefit from the continuous introduction of 3C titanium alloys.
3.4 Okeyi: The overall solution is accelerated
Founded in 1996, OKEYI landed on the Science and Technology Innovation Board of the Shanghai Stock Exchange in December 2020, becoming the first listed company on the Science and Technology Innovation Board with cemented carbide tools as its main business.
At present, the company's main products are cemented carbide products and CNC tool products: cemented carbide products, the company has been committed to the development of cemented carbide products since its establishment, has accumulated rich experience, is currently the largest enterprise in the production of sawtooth blades in China, and has established long-term and stable cooperative relations with well-known tool enterprises at home and abroad, and has won the title of "excellent supplier" of Black & Decker tools for many times;
The IPO fundraising project has been put into production, and the private placement project has enriched the product structure.
The company's IPO raised 40 million pieces of high-end CNC blade production capacity, which has been put into operation in the second quarter of 2022. In 2022, the company will increase 800 million, of which 600 million will be used for the construction of CNC tool industrial park, and plans to form an annual production capacity of 1,000 tons of high-performance bars, 3 million solid carbide tools, 200,000 sets of CNC tools, 5 million cermet blades and 10 tons of cermet saws.
The company optimizes the production capacity structure, focuses on the production capacity of high-end tools, and at the same time, on the basis of the existing production capacity, it has launched the production capacity improvement project of 20 million high-end CNC blades in advance, mainly for small parts processing fine grinding blades and tools in the aerospace field. The new production capacity of bars, solid carbide tools, tool matching, cermets, finely ground blades, aerospace tools and other production capacity will effectively enhance the company's comprehensive cutting service capabilities.
The products continue to go overseas, and the overall solution service business develops rapidly.
The company seized the export opportunity, increased overseas development efforts, continued to increase overseas brand agents, further improved the overseas layout, and achieved a doubling of revenue for some overseas customers in Asia, Europe and the United States in 2023H1, completing overseas shipments of 80.3345 million yuan. At present, the company has completed the overseas channel layout in more than 40 countries, mainly involving downstream application fields including automotive industry, mold manufacturing, aerospace, rail transit, etc.
At the beginning of August, the company disclosed that it had won the bid for the BMW crankshaft tool management service project of Xinchen Power, which lasted for 4 years, and the winning bid reflected that the company has a certain competitive advantage in the tool package business, as of the third quarter of 2023, the company's package business achieved revenue of about 17.4 million yuan.
3.5 Wald: The superhard tool leader acquired Xinjinquan, and the synergy resonance reached a new level
Founded in 2006 in Zhongguancun Electronic City Science and Technology Park, Beijing World Diamond Tools Co., Ltd. is a high-tech enterprise mainly engaged in the research and development, production and sales of superhard tools and superhard material products.
The main products include PCD/PCBN/CVDD cutting tools, solid carbide tools, diamond scoring wheels and their supporting products, and are widely used in consumer electronics, automobile manufacturing, construction machinery, aerospace, energy equipment and other industries.
The strength of superhard tools is leading, and the products continue to innovate.
Since 2021, the company has been developing tools for ball screw machining, and by the end of 2022, it has achieved mass production of PCBN rotary milling inserts.
There are many downstream applications of ball screws and planetary roller screws, and there is a broad space for development in high-precision and cutting-edge fields, including high-end CNC machine tools, general machinery, industrial robots, humanoid robots, aerospace, medicine, mold processing and other fields.
The new PCBN rotary milling inserts for ball screw machining will continue to benefit from the development of high-end manufacturing fields such as high-end CNC machine tools, humanoid robots, and aerospace in China. In addition, the company has also launched a ballway PCBN milling cutter for constant velocity universal joint machining, which has established a leading technological advantage in the domestic superhard tool market.
The merger and acquisition of Xinjinquan will continue to move forward with synergy and resonance.
World completed the acquisition of Shenzhen Xinjinquan Precision Technology Co., Ltd. in 2022.
Xin Jinquan is a high-end precision tool enterprise focusing on non-standardization, which can provide different materials such as single crystal diamond, polycrystalline diamond, cemented carbide, as well as customized tools of different shapes such as milling cutters, turning tools, boring cutters, reamers, etc. Its tool products are mainly used for the processing of precision structural parts such as shells, frames, cavities, card trays, card slots, buttons, and camera parts of 3C products.
It can provide one-stop customized tool solutions for industry customers such as preliminary consultation, product design, parameter adjustment, production delivery and after-sales service.
Through the merger and acquisition of Xin Jinquan, World has achieved deep integration in production technology, complemented each other in market development and customer development, improved the company's product categories and enriched the talent team and processing solutions.
3C customers are rich in resources, and titanium alloy machining tools are progressing rapidly.
Xin Jinquan's sales model is mainly based on direct sales, and its major customers include BYD Electronics, Likai Precision, Changying Precision, Lens Technology, Tongda Group, Lingyi Manufacturing, Kecheng Group, AAC Precision and other leading companies in the 3C industry. In 23 years, Apple launched a titanium alloy version of the mobile phone, Xin Jinquan won 15 million orders for titanium alloy processing tools in the first three quarters through Apple suppliers, and there are still a number of tools in the fourth quarter in proofing. In the future, the company's integral cemented carbide tools will continue to benefit from the introduction of titanium alloy in the 3C industry.
3.6 Xinrui shares: the leading cone bit acquired Zhuzhou Weikai, and the cemented carbide territory went to the next city
Founded in August 2005, Suzhou Xinrui Alloy Tools Co., Ltd. is a manufacturing service provider focusing on cemented carbide products and mining rock drilling tools and mining services.
The company's main products include: cemented carbide for oil drilling, cemented carbide for mining, matrix for diamond composite sheet, oil drill bit nozzle, ultra-fine cemented carbide bar, fine grain cutting tool, plate for stamping die, cold heading die, powder metallurgy mold, tungsten carbide tubular welding rod, wear-resistant parts, non-standard special-shaped parts and mining three-cone drill bit, impactor, etc., and the products are exported to more than 40 countries and regions such as Japan, South Korea, the United States, Canada, Australia, Russia, etc.
Acquired a controlling stake in Zhuzhou Weikai, and CNC tools were incorporated into the company's business map.
In 2021, the company completed the acquisition of 66.36% of the shares of Zhuzhou Weikai Cutting Tools Co., Ltd., which focuses on the R&D and production of matrix materials, geometry, finishing, surface and coating of CNC blades. At present, the company has nearly 20 brands and more than 800 models of blade products, about 60% of which are standardized products and 40% are non-standard customized products.
At the same time, Xinrui Co., Ltd. has also expanded its top hammer drilling tool products through its holding of Guizhou Huifeng Zhongyi Machinery Manufacturing Co., Ltd., and realized the production and sales of rock drilling tools (cone bits, down-the-hole impactors and top hammer drilling tools);
Risk Warning
1. The risk of macroeconomic downturn. Tungsten carbide and tools have the properties of industrial consumables, and their demand is usually affected by the prosperity of the manufacturing industry. If the downstream application fields of cemented carbide are relatively poor, it will have an impact on the demand for cemented carbide and tools;
2. The risk of intensified market competition. The field of cemented carbide deep processing is of great significance to the development of China's high-end manufacturing industry, and the world's major industrial countries and multinational giants have invested a lot of energy and resources in the research and development of related products.
International giants have enjoyed intellectual property protection in many core technology fields by virtue of their accumulation, deeply participated in the formulation of international industry standards, formed a strong market influence and brand awareness, and may formulate more radical competition policies for industry catch-ups, and Chinese companies may face greater competitive pressure from international giants in the development process;
3. The risk that the development of CNC machine tools is less than expected. Imported CNC machine tools usually match imported first-line brand tools, in contrast, domestic CNC machine tool manufacturers are more willing to accept domestic tools. If the development of China's CNC machine tools is relatively slow, it will directly affect the substitution process of domestic tools;
4. The substitution risk of additive manufacturing for subtractive manufacturing. Additive manufacturing uses the process of layer-by-layer superposition of materials, which is the exact opposite of subtractive manufacturing (including metal cutting), and discretizes the structure of a complex workpiece or component into a simple two-dimensional planar machining.
At present, additive manufacturing has gradually moved from technical research to practical industrial application, and has become an important technical means for direct manufacturing and repair and remanufacturing in the field of high-end manufacturing. With the gradual maturity of additive manufacturing technology and the continuous reduction of production costs, some precision parts in some cemented carbide tool application fields such as aerospace, medical equipment and other high-precision, sophisticated and cutting-edge industries have begun to use additive manufacturing, which will have an impact on metal cutting processing methods, and then affect the market size of cemented carbide tools.
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