Over 50% surge at the start of the year! Behind the "crazy rise" lies a trust crisis. When will the tungsten price inflection point arrive?

“In previous years, the daily fluctuation of tungsten prices was less than a thousand yuan, but now, every day it rises by over ten thousand yuan, and people are actually getting used to it,” a industry insider told Caixin News, commenting on the accelerated price surge since the beginning of the year.

Caixin News learned from multiple industry sources that, under the background of tightening supply on the mineral side and downstream restocking, as well as recent crackdowns on illegal mining in major production areas leading to a decline in spot circulation, tungsten prices have entered a “jumping” mode.

The rapid increase in tungsten prices has also impacted downstream market companies. During interviews, some market participants revealed that there is a preliminary breach of trust in spot market contracts, with some downstream companies unable to bear the sudden price jumps, facing a temporary “no stock” dilemma.

Currently, high tungsten prices are being transmitted down the industry chain, including leading tungsten companies such as Xiamen Tungsten (600549.SH), China Tungsten High-tech (000657.SZ), Xianglu Tungsten (002842.SZ), and Zhangyuan Tungsten (002378.SZ), which have all issued multiple rounds of price increase notices this year.

Amid the tightening of mineral supply and tungsten’s rigid demand as an “industrial tooth,” industry insiders believe that tungsten prices will remain high in the future. However, the sharp short-term price surge has raised questions in the market: Is this rapid rise driven by short-term supply and demand imbalances, or does it signal a structural, trend-based “long bull” market? And how long can such a trend last? Market participants warn that, in the short term, it is also necessary to watch for the risk of prices pulling back after a spike.

Mineral Supply Tightens, Tungsten Prices Jump at Year Start

According to Choice data, as of February 12, the average price of black tungsten concentrate (grade ≥65%) was 696,000 yuan/ton, an increase of approximately 51.6% year-to-date.

Black tungsten concentrate (≥65%) price trend data source: Choice

In the current rapid price surge, new developments have emerged within the industry. Zhang Wei (pseudonym), a manager at a downstream tungsten manufacturer, told Caixin News, “Prices are rising too fast, causing a trust crisis in the spot market. Contract breaches are quite common now. To ensure they get the goods, clients often place orders exceeding their needs.”

In response, Caixin News learned from Xiamen Tungsten, as an investor, that downstream demand has not shown significant fluctuations. “At the same time, considering that tungsten prices change daily, we adjust our procurement based on overall market demand.”

It is worth noting that the quotes from major tungsten companies are considered industry price indicators. For example, in the first half of February, the long-term guidance and purchase prices for black tungsten concentrate (WO3 ≥55%) increased by 24% and 28%, respectively, compared to the second half of January. In January, Xiamen Tungsten’s subsidiary, Xiamen Honglu, nearly raised prices across all fine tungsten wire products.

The rising tungsten prices have put pressure on downstream tool manufacturers. An industry insider told Caixin News, “Save where you can. For example, a tool that can cut 5,000 parts before needs to be sharpened, now it can be used until it truly wears out.”

Upstream companies with tungsten ore resources are enjoying the benefits of price increases. Currently, Xiamen Tungsten, Zhangyuan Tungsten, and Xianglu Tungsten have all announced profit growth forecasts for 2025, with the core reason being the sustained rise in tungsten raw material prices.

The tight mineral supply has caused some downstream companies to face a “no stock” situation due to high prices. Several industry insiders told Caixin News, “Recently, only tungsten ore and scrap materials have about a month of circulation; other segments are almost out of stock,” and “most companies are not stockpiling but are buying and selling simultaneously.”

Strict Crackdown on Illegal Mining Reduces Market Circulation

“On the supply side, the main domestic production areas are strictly inspecting tax invoices, which is a special factor driving the price increase this year,” said Caixin News after speaking with multiple industry insiders. Since late last year, China has intensified crackdowns on illegal tungsten mining, resulting in an estimated reduction of about one-third to one-quarter of the raw material circulation in the market.

A long-time industry professional told Caixin News that, based on recent years’ actual domestic tungsten supply of about 120,000 to 130,000 tons annually, roughly 20% of this is “invoice-free.” “These non-compliant mines can’t issue invoices, so they can’t circulate legally.” He added, “Most of the compliant mines are large groups that can internally absorb the output, so they hardly circulate in the market.”

This view is also supported by sources from Xiamen Tungsten and Zhangyuan Tungsten. Caixin News learned from these companies that “the company’s downstream deep-processing demand is very high, and currently, domestic tungsten self-sufficiency is only about 20%,” with 2024 self-sufficiency estimated at around 20%, and the remaining needs are met through external procurement.

SMM tungsten-molybdenum analyst Li Jiahui told Caixin News that since the beginning of the year, crackdowns on illegal mining and inspections of gray production in major tungsten-producing regions like Jiangxi have led to a decline in small mines’ operations, tightening domestic tungsten concentrate supply. Meanwhile, increased demand for restocking in downstream smelting processes like APT has further exacerbated supply-demand tensions, triggering price jumps.

According to incomplete statistics from Caixin News, recent efforts in some regions of Jiangxi to crack down on illegal mining include the December 2025 announcement by Hukeng Tungsten encouraging reports of illegal mining activities; in January, Dayu County announced four typical cases of tungsten mining theft, with Tieshanlong Tungsten collaborating with local authorities to crack down on illegal mining.

Public data shows that China has continuously implemented control measures and quota systems for tungsten mining. According to industry statistics, the first batch of tungsten mining quotas for 2025 decreased by 6.45% year-over-year, with a long-term trend of slowing quotas. Data indicates that over-collection of tungsten has been decreasing, from 35.78% of total production in 2015 to 12.63% in 2024.

It should be noted that tungsten, as a scarce minor metal, remains in a long-term supply-demand balance. Any disturbance on the mineral side can significantly impact market prices.

Smooth Price Transmission but Diminishing at Each Level, Downstream Resilience Varies

A representative from Xiamen Tungsten told Caixin News that tungsten metal is an essential “hard currency” in processing and manufacturing, with a relatively low cost in the industry chain. Currently, the upward price transmission from mineral to downstream is generally smooth, but if prices continue to rise, whether this can persist is uncertain.

A representative from China Tungsten High-tech also told Caixin News that their company’s hard alloy products vary in price adjustment, with different categories experiencing multiple price hikes this year, each with different strategies.

Xianglu Tungsten’s performance forecast released at the end of January mentioned that tungsten raw material prices are expected to continue rising throughout 2025, with supply and demand in the tungsten market improving compared to previous years. The company’s bargaining power has increased, and the transmission of raw material price increases to downstream products is relatively smooth.

Wang Dong, chief analyst at R.C. Information with over ten years of experience in the tungsten industry, told Caixin News that, amid the rapid rise in tungsten prices, factors such as increased capital occupation have accelerated price transmission within the industry chain, mainly characterized by quick inflows and outflows. The midstream hard alloy segment has relatively low bargaining power, and some small and medium-sized manufacturers are expected to be phased out.

Li Jiahui noted that overall, tungsten price transmission to downstream is smooth but gradually weakening at each level. Raw material prices and APT/powder segments transmit quickly, with high-value-added hard alloys and high-end tools able to pass on costs effectively due to strong demand and bargaining power. Conversely, low-end processing sectors have weaker resilience and face greater transmission resistance.

It is worth noting that about 60% of downstream tungsten demand comes from hard alloys, with roughly half used in the tool industry.

Some tool manufacturers recently told Caixin News that they are experiencing increased demand for mid-to-high-end downstream products, with order lead times extending from over a month to 2-3 months.

Industry data shows that tungsten raw materials account for a small proportion of the value in tools, and tool costs constitute a minor part of manufacturing expenses. As a result, price increases in tungsten raw materials have a limited impact on terminal products. The raw material cost accounts for about 10%-15% of the tool blade price, with 80% of that being manufacturing service fees and profit margins for tool companies. Additionally, recycled old tools are generally recovered, with prices around 60%-70% of tungsten carbide powder prices.

Supply-Demand Contradictions Are Difficult to Resolve in the Short Term; Caution Against Post-Rise Pullbacks

Regarding the current market situation, Zhang Wei is optimistic about tungsten prices. He told Caixin News, “Tungsten is an indispensable raw material in ‘industrial teeth,’ and its overall cost share in terminal industrial products is not high. Customers are generally receptive to high prices. From the supply side, new capacity is limited, and domestic quotas are restrictive. Foreign new mines are developing slowly, so short-term supply and demand are unlikely to ease.”

Recently, a representative from Luoyang Molybdenum (603993.SH) told Caixin News that long-term tungsten raw material supply remains tight, compounded by national restrictions on mine quotas, providing strong support for prices. The demand from traditional industries, high-end manufacturing, and emerging fields for tungsten continues to grow, and tungsten prices are expected to remain in a high range historically.

Li Jiahui said that, in the short term, the tungsten market experienced a decline before the Spring Festival, with reduced recycling and transaction volumes, intensifying raw material shortages at smelting plants. Post-holiday, as the Two Sessions approach, mine operating rates are unlikely to increase significantly, and downstream resumption of work and production will continue to face supply-demand tensions. In the medium to long term, limited new tungsten mine capacity, stricter domestic controls, and sustained demand in military and new energy sectors support a relatively strong tungsten price center.

Wang Dong added that the rapid pace of price increases has pushed market sentiment to extremes. He expects some correction after the rise, with prices possibly pulling back in the second quarter. Regarding domestic tungsten mine quotas for 2026, he noted that some long-operating mines have not fully utilized their quotas in recent years. With tungsten’s strategic resource status becoming more prominent, overall quota reductions are expected, but increased production incentives due to high prices may alleviate some supply tensions.

Some industry insiders remain cautious, warning that “the current rapid rise has pushed market sentiment to the limit, and there may be a pullback after the surge.”

(Article source: Caixin News)