Over 50% surge at the start of the year! Behind the "crazy rise," there is a trust crisis. When will the tungsten price trend reversal occur?

Cailian Press, February 14 — (Reporter Liang Xiangcai, Huang Lu) “In previous years, the daily fluctuation in tungsten prices was no more than a thousand yuan. Now, if it doesn’t rise by over ten thousand yuan each day, people are actually unaccustomed to it.” A industry insider lamented to Cailian Press about the accelerated increase in tungsten prices since the beginning of the year.

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

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

Currently, high tungsten prices are being transmitted downstream in 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 the rigid demand for tungsten 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 high-level rise caused by short-term supply and demand imbalance, or does it signal a structural and 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 pay attention to the risk of a sharp pullback after the surge.

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.

Price trend of black tungsten concentrate (≥65%) Data source: Choice As tungsten prices surge rapidly, new developments have emerged within the industry. Zhang Wei (pseudonym), a person in charge of a downstream tungsten manufacturer, told Cailian Press, “Prices are rising too fast, causing a trust crisis in the spot market. Contract breaches are quite common now. Under these circumstances, customers often place orders exceeding their needs to ensure they get the goods.”

In response, Cailian Press 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 overall procurement based on market demand.”

It is worth noting that the quotations from major tungsten industry leaders are considered industry chain 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 Cailian Press, “Save where you can, for example, a tool that can cut 5,000 pieces of workpieces can now be re-sharpened and used again until it truly cannot be used anymore.”

Upstream companies with tungsten mineral 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 continuous 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 Cailian Press, “Recently, only tungsten ore and scrap materials have about a month of circulation; other segments are almost out of stock,” and “Most companies currently have no intention of stockpiling, they are buying raw materials while selling.”

Strict Crackdown on Illegal Mining, Decrease in Mineral Circulation

“On the supply side, the strict inspection of tax invoices in major domestic producing areas is a special factor driving the price increase this year,” said a Cailian Press interviewee. Industry sources revealed that since the end of last year, China has intensified crackdowns on illegal tungsten mining, resulting in an approximate 30% to 25% reduction in the circulation of raw materials in the market.

A long-time industry professional told Cailian Press 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,” he explained. “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 industry insiders from Xiamen Tungsten and Zhangyuan Tungsten. When asked, they confirmed that “the company’s downstream deep-processing demand is very high, and currently, domestic tungsten self-sufficiency is only about 20%,” with the 2024 self-sufficiency rate estimated at around 20%, and the remaining needs are met through external purchases.

SMM tungsten-molybdenum analyst Li Jiahui told Cailian Press that since the beginning of the year, crackdowns on illegal mining and inspections of gray industry in major tungsten-producing areas like Jiangxi have led to a decline in small mines’ operations, tightening domestic tungsten concentrate supply. Meanwhile, downstream smelting links such as APT have increased restocking within the month, further exacerbating supply-demand tensions and driving prices higher.

According to incomplete statistics from Cailian Press, recent crackdowns on illegal mining have intensified in parts of Jiangxi, a major tungsten-producing region. For example, in December 2025, Jiangxi Hukeng Tungsten issued an announcement encouraging reporting of illegal mining activities; in January this year, 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 continued to implement control and quota systems for tungsten mining. According to industry statistics, the first batch of tungsten mining quotas for 2025 decreased by 6.45% year-on-year, with a long-term trend of slowing quotas. Data indicates that over-collection of tungsten has been decreasing, with over-collection accounting for 35.78% of production in 2015, dropping 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 but Diminishing Price Transmission Upstream and Downstream

A representative from Xiamen Tungsten told Cailian Press that tungsten metal is an essential “hard currency” in processing and manufacturing, with consumable attributes in industrial tools, and its cost in the industry chain is relatively low. Currently, the upward transmission of tungsten prices from the mineral side is generally smooth downstream, but if prices continue to rise, whether this transmission can persist remains uncertain.

A representative from China Tungsten High-tech also told Cailian Press that the company’s downstream cemented carbide products vary in price adjustment, with some categories having been adjusted multiple times this year, each with different strategies.

Xianglu Tungsten, in its January earnings forecast, 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 for tungsten products 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 chain, told Cailian Press that the rapid surge in tungsten prices has been driven by factors such as the quick increase in capital occupation, leading to faster price transmission within the industry chain, mainly through quick buy and sell. The midstream hard alloy segment has less bargaining power, and some small and medium-sized manufacturers are expected to be phased out in the future.

Li Jiahui pointed out that overall, the downward transmission of tungsten prices to downstream is smooth but gradually weakening. Raw materials to APT and powder segments transmit quickly, while high-value-added cemented carbide and high-end tools, due to strong demand and high bargaining power, can pass on costs smoothly. Low-end processing sectors have weaker capacity to bear costs, and transmission faces resistance.

It is noteworthy that about 60% of downstream tungsten demand is in cemented carbide, with roughly half of that used in the tool industry.

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

Statistics show that tungsten raw materials account for a small proportion of the value of tools, and tool costs constitute a minor part of manufacturing expenses. As a result, the impact of tungsten raw material price increases on terminal products is significantly reduced. The cost of tungsten raw materials accounts for about 10%-15% of the price of cutting inserts, with 80% of that being manufacturing services and profit margins for tool companies. Additionally, used tools are generally recycled, with prices around 60%-70% of tungsten carbide powder prices.

Supply and Demand Contradictions Are Difficult to Resolve in the Short Term; Caution Against Post-High Pullback

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

Recently, a person from Luoyang Molybdenum (603993.SH) told Cailian Press that long-term tungsten raw material supply remains tight, compounded by national restrictions on mine quotas, providing strong support for mineral prices. The demand from traditional industries and high-end manufacturing continues to grow, and emerging fields’ demand for tungsten is expected to further release, supporting tungsten prices to stay in a relatively high range historically.

Li Jiahui said that, in the short term, before the Spring Festival, the scrap tungsten market entered a holiday state first, with obvious declines in recycling and transaction volumes, intensifying raw material shortages at smelting plants. After the festival, the industry chain will face restocking needs, and with the upcoming Two Sessions, mine operation rates are unlikely to increase significantly. Downstream resumption of work and production will continue to face supply-demand contradictions. In the medium to long term, limited growth in global tungsten mines, stricter domestic controls, and sustained demand in military and new energy fields will keep supply-demand tight, supporting tungsten prices to remain relatively strong.

Wang Dong said, “The pace of price increases is too fast. We initially expected prices to reach current levels in the second quarter, but it has already exceeded expectations.” He expects some room for further short-term increases but believes this rapid surge is unlikely to sustain at high levels for long. He predicts that early in the second quarter, tungsten prices may face correction.

Regarding the 2026 domestic tungsten mine quota issuance, Wang Dong said that in recent years, some long-exploited tungsten mines in China have struggled to exhaust their quotas. Coupled with the strategic importance of tungsten as a resource, it is expected that overall mine quotas will further shrink this year. Stimulated by high prices, mining companies may become more active, potentially alleviating some temporary supply tensions.

Some industry insiders with a cautious outlook told Cailian Press that “the current rapid rise has pushed market sentiment to extremes, and there may be a pullback after the surge.”