Tungsten prices have accelerated their rise since the beginning of the year, with one industry insider remarking that while daily price fluctuations previously stayed within a few thousand yuan, increases of over ten thousand yuan have now become routine. Industry sources indicate that shrinking supply from mining operations, combined with downstream inventory replenishment and recent crackdowns on illegal mining in key production areas reducing spot market circulation, have propelled tungsten prices into a rapid ascent.
The sharp price surge is already impacting downstream market participants. Reports suggest early signs of contract default and trust issues in some tungsten spot markets, with certain downstream companies facing temporary shortages as they struggle to absorb the price hikes. High tungsten prices are now transmitting down the supply chain. Leading producers including Xiamen Tungsten, China Tungsten High-tech, Xianglu Tungsten, and Zhangyuan Tungsten have issued multiple price adjustment notices this year.
Against the backdrop of tightening mining supply and robust demand for tungsten as an "industrial teeth" material, industry experts anticipate prices will remain elevated. However, the rapid short-term surge raises questions about whether this represents a temporary supply-demand imbalance or signals a structural, trend-driven bull market, and how long such momentum can last. Market observers caution about potential pullback risks following the sharp climb.
According to Choice data, the average price of black tungsten concentrate (≥65% grade) reached 696,000 yuan per ton by February 12, marking an approximate 51.6% increase year-to-date. The current price surge has introduced new market dynamics. Zhang Wei (pseudonym), a representative from a downstream tungsten manufacturer, revealed that rapid price increases have triggered trust issues in spot markets, with contract defaults becoming relatively common. Customers are now placing oversized orders to secure supply.
Xiamen Tungsten indicated in investor communications that downstream demand remains stable without major fluctuations, while acknowledging daily price adjustments based on overall market conditions. Major producers' pricing serves as industry benchmarks. Xianglu Tungsten and Zhangyuan Tungsten raised their long-term contract guidance/purchase prices for black tungsten concentrate (WO3≥55%) by 24% and 28% respectively in the first half of February compared to late January. Xiamen Honglu, a Xiamen Tungsten subsidiary, adjusted prices upward for nearly all fine tungsten wire products in January.
Downstream tool manufacturers are feeling the price pressure. An industry participant noted cost-saving measures like extending tool lifespan through regrinding. Upstream companies with tungsten resources are benefiting from the price surge. Xiamen Tungsten, Zhangyuan Tungsten, and Xianglu Tungsten have all issued 2025 performance growth forecasts attributing improvement mainly to rising tungsten raw material prices.
Supply constraints are leaving some downstream companies facing material shortages. Multiple sources indicate only tungsten ore and scrap materials maintain about one month's circulation volume, with other segments operating on backorders. Most enterprises currently avoid inventory buildup, maintaining a just-in-time approach.
Enhanced tax invoice scrutiny in domestic production areas represents a special factor driving this year's price increase, industry sources suggest. Since late last year, intensified crackdowns on illegal tungsten mining have reduced circulating raw material supply by approximately one-quarter to one-third. An industry veteran explained that of China's annual tungsten ore supply of 120,000-130,000 tons, about 20% traditionally lacked proper documentation, making it non-compliant and non-tradable. Furthermore, quota-controlled production mostly belongs to large groups that consume it internally rather than circulating it commercially.
These observations find support in comments from Xiamen Tungsten and Zhangyuan Tungsten representatives, who noted significant downstream processing demand with current mining self-sufficiency rates around 20%, requiring external purchases to cover shortfalls. SMM tungsten-molybdenum analyst Li Jiahui stated that crackdowns on illegal mining and gray market activities in key production areas like Jiangxi have reduced output from small mines, tightening domestic tungsten concentrate supply. Meanwhile, downstream inventory replenishment demand for ammonium paratungstate (APT) and other smelting products has intensified market contradictions, fueling price surges.
Available information shows Jiangxi authorities have strengthened enforcement against illegal mining. In December 2025, Jiangxi Hukeng Tungsten encouraged reports of illegal mining activities, while Dayu County publicized four typical illegal mining cases in January. Tieshanlong Tungsten collaborated with local authorities to combat unauthorized extraction. China maintains controlled tungsten mining with quota systems. First-batch 2025 quotas decreased 6.45% year-on-year, showing a long-term slowing trend. Excess production has consistently declined from 35.78% of total output in 2015 to 12.63% in 2024.
As a scarce minor metal, tungsten maintains long-term supply-demand tight balance, making it particularly sensitive to mining disruptions. Downstream price transmission remains effective though diminishing progressively, with varying impact tolerance among companies. Xiamen Tungsten representatives described tungsten as essential "hard currency" in manufacturing with consumable characteristics in industrial tools, representing relatively low cost proportion in the supply chain. While current price increases transmit smoothly downstream, continued transmission at sustained high levels remains uncertain.
China Tungsten High-tech noted differentiated adjustment strategies across its hard alloy product categories, with blade products undergoing multiple price revisions this year. Xianglu Tungsten's late-January performance forecast mentioned improved tungsten market supply-demand conditions in 2025 with enhanced pricing power and smooth cost transmission. Wang Dong, chief analyst at R.C Information with over ten years of tungsten industry experience, observed accelerated price transmission due to rising capital occupation, potentially squeezing out midstream small and medium hard alloy producers.
Li Jiahui confirmed generally smooth but progressively weakening price transmission, with faster pass-through from raw materials to APT and powder segments. High-value hard alloy and premium tool manufacturers with strong demand and pricing power successfully transfer costs, while low-end processors face greater resistance. Hard alloys account for about 60% of downstream tungsten demand, half of which serves tool applications. One tool manufacturer reported extended order backlogs from over one month to 2-3 months, indicating rising mid-to-high-end product demand.
Tungsten raw material costs constitute only 10%-15% of blade prices, with 80% representing manufacturing services and producer margins. Most used blades get recycled at 60%-70% of tungsten powder prices, minimizing terminal impact. Zhang Wei maintains optimistic outlook given tungsten's essential "industrial teeth" role with low overall cost proportion in final products. Limited new mining capacity, domestic quota restrictions, and slow foreign mine development suggest sustained supply-demand tension.
A China Molybdenum representative cited long-term supply tightness and mining quota limitations supporting strong pricing. Traditional industrial and advanced manufacturing demand continues growing, while emerging applications may further boost consumption, keeping prices historically high. Li Jiahui projected continued tightness post-Spring Festival as holiday-affected scrap market recovery lags smelter demand, with mining production unlikely to rebound significantly around parliamentary sessions. Medium-to-long term, limited global mine growth and stricter domestic controls against sustained demand from military and new energy applications should maintain firm price support.
Wang Dong noted the price surge outpaced expectations, reaching projected Q2 levels prematurely. While further short-term gains remain possible, the rapid increase appears unsustainable, with adjustment pressures likely by early Q2. Regarding 2026 quota expectations, Wang anticipated further contraction given underutilized quotas at older mines and tungsten's strategic resource status. High prices may stimulate production, potentially easing temporary supply tightness. Some cautious observers warn the accelerated rally has pushed market sentiment to extremes, raising correction risks.