Tungsten Prices Explained

Production reduction, shifting trade dynamics, and global shipping challenges fueled the soaring (at its ten-year high) tungsten prices across regional markets. 

China (the world’s largest tungsten producer) accounts for 80% of the total global tungsten production. However, reduced mining activity and major tungsten companies preferring to sell concentrate on long-term orders resulted in commodity shortage. 

In the North American market, shifting trade dynamics from major suppliers (particularly China) drive varying tungsten prices. These fluctuations are largely supported by the region’s automotive industry volatility and the U.S. trade tensions with China, following tariff implementations. 

In Asia, moderate supply levels translated to a 1.5% increase in prices due to steady demand from the electric industry. Also, the operational inefficiencies of smelters because of inventory shortage narrowed local output.

The European market demonstrated price variations due to logistical issues. While demand for some sectors remained muted because of regulatory decisions, the defense and shipbuilding industries continue posting robust inquiries. 

To reduce Chinese dependency, Solvay (a Belgian company) announced plans to supply Europe with rare earth metals from its French facility.

Why are tungsten prices fluctuating?

1. Mining and Other Applications

The main factor contributing to the tungsten industry is the melting nature of the mining industry. The growing demand for cutting tools and precision equipment made tungsten carbide a significant factor in its segmented market. 

Also, tungsten concentrates are material of tungsten filament (a silicon-wafer cutting tool in the photovoltaic industry). The depletion of coal reserves and the escalating tension in the Middle East prompted several countries to ramp up their solar production. This resulted in a 50.3% increase in global tungsten purchases.

2. Increasing Demand for Tungsten Concentrate

Apart from being the largest producer of tungsten, China consumes the most tungsten as well and its appetite for tungsten concentrate is significantly growing. 

Its import is more than $5 million yearly due to strong domestic demand for raw material feedstock which faced tight supply issues. Also, production costs in the Chinese tungsten market rise rapidly because of smelting issues.

3. Military Applications

The commodity’s high melting point is important in various military applications, like tank manufacturing, armor-piercing bullets, and aircraft engines.

With the world in increasing uncertainty, security sectors from several countries increased their imports of rare-earth metals useful in strengthening their security measures. 

As a result, the Ministry of National Security in China plans to implement a critical metal export quota. The country already imposed 20% tariffs on tungsten concentrates two years before to protect domestic reserves.

4. Supply Chain Due Diligence

The growing pressure for improved due diligence across the supply chain prompted downstream consumers to adopt risk-avoidance strategies by asking their suppliers to stop sourcing materials from ‘suspended countries’.

A great example of this is the conflict in the Democratic Republic of Congo where miners experienced unfair pay while working in a risky environment. Additionally, the increasing trade war between the U.S. and China will further introduce a supply chain deficit, spiking tungsten prices.

Which variables impact the price of tungsten?

• Mining and Other Applications
• Increasing Demand for Tungsten Concentrate
• Military Applications
• Supply Chain Due Diligence
• Geopolitical Tensions

Where does tungsten come from?

Tungsten (also known as wolfram) is a chemical element with the symbol W and atomic number 74. It was first isolated in 1783 by Spanish chemists Juan José and Fausto Elhuyar by reducing tungsten oxide (WO₃) derived from the mineral wolframite. The name “tungsten” comes from the Swedish words ‘tung’ (heavy) and ‘sten’ (stone), reflecting its high density.

Tungsten manufacturing involves several steps. First, tungsten ore is crushed and ground into a fine powder. Then, the powder is subjected to various chemical reactions to extract tungsten in the form of ammonium paratungstate (APT).

APT is purified and converted into tungsten oxide, which is processed into pure tungsten metal or tungsten carbide (a very hard material used in cutting tools). The top tungsten-producing countries are China (dominating global production with its 60,000 metric ton output), followed by Vietnam, Russia, North Korea, and Bolivia.

What are the uses of tungsten?

The commodity’s unique properties like high melting point, hardness, and density find extensive application in various industries.

1. Lighting Industry – The production of light bulb filaments uses tungsten due to its high melting point and excellent heat resistance. This allows tungsten filaments to emit bright light while withstanding high temperatures, making them ideal for long-lasting, energy-efficient light bulbs.

2. Cutting Tools and Drills – Tungsten carbide (a compound of tungsten) is known for its extraordinary hardness and wear resistance. This makes it perfect for cutting tools and drills used in the machinery processes, enhancing efficiency and precision in industries such as automotive, aerospace, and manufacturing.

3. Aerospace and Defense – Its high density and strength make it essential for producing heavy alloys used in aerospace and defense applications. Also, it is used in components like counterweights, ballasts, and armor-piercing projectiles, ensuring the safety and effectiveness of aerospace and defense systems.

4. Electrical Contacts and X-ray Tubes – It is also used in X-ray tubes, where its high melting point and good heat conductivity help dissolve heat efficiently, making it essential for medical imaging, industrial inspection, and scientific research.

5. Heating Elements – Tungsten is used in heating elements for vacuum furnaces and semiconductor equipment due to its high melting point and stability. Its heating elements guarantee uniform and controlled heating, improving efficiency and reliability in thermal processing.

What is the future price of tungsten?

The demand for tungsten is increasing across multiple industries, such as defense, solar energy, and mining. 

The defense sector fuels the commodity market due to the metal’s use in armor-piercing ammunition and radiation shielding. The solar industry uses tungsten in solar panels because of its high melting point and durability. Additionally, the mining industry relies on tungsten for drilling and cutting equipment, further boosting its demand.

On the supply side, the Chinese government’s export regulations and tariffs influence the global tungsten market. By controlling the export of tungsten, China influences global prices and supply. This makes importing countries struggle to secure sufficient tungsten for their industries, resulting in increased costs and potential production delays. 

As a result, companies seek alternative sources and invest in new mining projects outside of China. 

For instance, Kennametal and Xiamen Tungsten collaborate with Bolivian and Peruvian mining firms to develop new tungsten deposits. The Department of Defense in the U.S. provides funding opportunities for Nevada’s Guardian Metals to improve domestic metal assets.

Overall, the tungsten market is expected to reach $9.49 billion in 2032, growing at a CAGR of 8% and a price of $61.2 per kilogram.