Tightening supply and surging demand lead to a "big market" for small metals

Recently, the small metal sector, known as the “industrial vitamins,” has become a focus of capital attention. On February 27, the small metal sector continued its upward trend. According to data from iFinD, the Small Metal Index surged by 7.69% by the close of trading, with 12 listed companies in the sector hitting the daily limit.

Xiaoming Yu, senior investment advisor at Shaanxi Jufeng Investment Information Co., Ltd., told Securities Daily that since the beginning of this year, small metals have attracted high market attention mainly due to supply-side impacts from domestic quotas and overseas production restrictions, combined with rapidly growing demand in AI computing power, new energy, military industry, robotics, and other sectors, leading to a persistent widening of supply and demand gaps. At the same time, many countries have listed small metals as strategic critical minerals, re-evaluating their pricing power and strategic value.

Shi Jia, tungsten industry analyst at Shanghai Steel Union’s Ferroalloy Division, told Securities Daily that the strategic small metal industry is entering a new competitive stage centered on resources. In the current market environment, upstream resources are no longer just raw material reserves but have evolved into a “moat” for companies to resist market risks and a lifeline to ensure supply chain security.

Historically, demand for small metals was closely linked to traditional industries, with obvious cyclical fluctuations. Today, industries represented by AI, new energy, and military sectors are systematically reshaping the strategic position of small metals.

Regarding the increased market attention to small metals, Shi Jia said that the core driving forces come from the explosive demand for specific varieties driven by the global “new energy revolution” and “intelligent wave,” while rigid supply constraints further amplify this trend.

Shi Jia explained that in AI and smart technology fields, high-performance neodymium-iron-boron and high-end solder are critical, widely used in AI servers, humanoid robots, and consumer electronics; in the new energy sector, neodymium-iron-boron is used in electric vehicle drive motors, and ultra-fine tungsten wires (below 30 microns) are used for photovoltaic silicon wafer cutting; in commercial aerospace, samarium-cobalt magnets and rare earth alloys are used in satellite attitude control, rocket navigation, and eVTOL power systems.

While demand is exploding, rigid supply constraints are further intensifying market tensions. According to reports, the spot markets for rare earths, tungsten, lithium, and other key rare metals have experienced tightening supply and demand since the Spring Festival, with overall prices rising.

Since the beginning of this year, institutions have frequently conducted research on small metal listed companies, focusing on raw material sources, capacity layout, and market applications.

Lu Keqing, general manager of Ningxia Jafeng Fund Management Co., Ltd., told Securities Daily that investors are paying attention to these three aspects because the pricing logic of small metals is undergoing profound changes—evolving from traditional cyclical commodities to strategic assets. “Raw material costs determine a company’s cost bottom line and resource security margin. Currently, whoever controls upstream resources holds the discourse power in the industry chain. Capacity layout relates to supply flexibility and response speed, while market applications directly determine whether a company can seize growth opportunities in the wave of new productive forces.”

In response to investor concerns, several listed companies have revealed their resource deployment “cards.”

According to public information released by Oriental Tantalum, the company has established a global procurement system for tantalum-niobium concentrates. Relying on long-term cooperation with reputable and large-scale domestic and international mineral traders, it has secured core raw material sources. The company’s actual controller, China Nonferrous Metal Industry’s China Nonferrous Metals Trading Co., Ltd., has completed an equity acquisition of the Brazilian ore producer Taboca Mining. In April 2025, the company signed a procurement contract with Taboca Mining to purchase approximately 3,000 tons of ferrotantalum-niobium raw materials, with an estimated purchase amount of 540 million yuan. This strategic move will further enhance the company’s autonomous control over tantalum-niobium ore supply.

Xiamen Tungsten responded to investor questions, stating that the company currently owns four tungsten mines, with three operational mines producing about 12,000 tons of tungsten concentrate annually, and a resource guarantee rate of about 20%. Additionally, the Bobaijudian Tung-Molybdenum Mine is under construction, and upon reaching full production, it is expected to produce about 3,200 tons of tungsten concentrate annually. The company plans to improve raw material security through advancing construction of ongoing mines, conducting deep exploration, and actively expanding tungsten scrap recycling.