Mineral supply is tight, tungsten prices soar at the beginning of the year.

"In the past, the price of ore would fluctuate by no more than a few thousand yuan in a day. Now, with prices increasing by tens of thousands every day, people are actually not used to it," exclaimed an industry insider to a journalist regarding the rapid rise in the price of tungsten since the beginning of the year. Through interviews with various industry sources, the journalist learned that due to the contraction of the supply of ore and the background of downstream stock replenishment, as well as the recent crackdown on illegal mining in the main production areas leading to a decrease in the circulation of spot goods, the price of tungsten has entered a "surge mode". The rapid increase in the price of tungsten also has a certain impact on downstream enterprises in the market. During interviews, the journalist learned that some spot markets for tungsten have shown signs of contract breach and trust crisis, as some downstream enterprises struggle to cope with the soaring prices, leading to a temporary predicament of not being able to afford the rising costs. Currently, the high price of tungsten is being transmitted downstream through the industry chain, including leading tungsten enterprises such as Xiamen Tungsten, China Tungsten and Hightech Materials, Guangdong Xianglu Tungsten, and Chongyi Zhangyuan Tungsten, all of which have issued multiple rounds of price increase notices this year. With the tightening supply of ore and tungsten's status as an essential material for industrial applications, the industry believes that the price of tungsten will continue to remain high in the future. However, the substantial increase in price in the short term has raised questions in the market: is this rapid surge due to short-term supply and demand imbalances, or does it indicate a structural, trend-based "bull market," and how long can this trend sustain. Therefore, market participants warn that in the short term, it is necessary to be cautious of the potential risks of a high pullback. Scarcity of supply in the ore sector leads to a jump in tungsten prices at the beginning of the year According to Choice data, as of February 12th, the average price of black tungsten concentrate (grade 65%) was 69,600 yuan/ton, with a year-on-year increase of about 51.6%. Amidst the rapid rise in tungsten prices, the industry has witnessed new developments. Zhang Wei (pseudonym), a responsible person from a tungsten downstream company, revealed to the journalist, "Prices have risen too fast, leading to a crisis of trust in the spot market, and breach of contract is a common phenomenon at present. In this situation, in order to ensure delivery, customers tend to place more orders than necessary." In response to this, the journalist learned, in an investor capacity, from Xiamen Tungsten that there has not been a significant fluctuation in downstream demand. "However, considering the fluctuation in tungsten prices daily, we will make adjustments based on the overall market situation." It is worth noting that the quotations of leading tungsten companies are considered as price indicators in the industry chain. For example, in the first half of February, the guidance/purchase prices of black tungsten concentrate (WO3 55%) from Guangdong Xianglu Tungsten and Chongyi Zhangyuan Tungsten increased by 24% and 28% respectively compared to the second half of January. In January, Xiamen Tungsten's Xiamen Honglu raised the prices of almost all fine tungsten wire products. The increase in tungsten prices has put pressure on downstream tool manufacturers. An industry insider told the journalist, "To save costs, for example, a tool that used to cut five thousand pieces can now be sharpened after use, and used until it can no longer function." Upstream enterprises with tungsten resources have fully benefited from the rise in tungsten prices. Currently, Xiamen Tungsten, Chongyi Zhangyuan Tungsten, and Guangdong Xianglu Tungsten have all issued performance forecasts for 2025, with the core reason for the performance growth being the continuous rise in the prices of tungsten raw materials. The scarcity of supply in the ore sector has left some downstream enterprises unable to cope with the high prices. Several industry insiders told the journalist, "Currently, only tungsten ore and scrap have a circulation period of about a month, while other links are almost in a state of undersupply," and, "Most enterprises currently have no intention of stockpiling goods, but are instead focusing on production and sales." Crackdown on illegal mining leads to a drop in ore circulation "On the supply side, the strict inspection of invoices in the main tungsten-producing areas is a special factor behind this year's price increase." The journalists learned from discussions with several industry insiders that since the end of last year, China has intensified its crackdown on illegal mining of tungsten ore, leading to a "roughly 25%-33% decrease in the supply of materials circulating in the market." A person who has been engaged in tungsten industry-related business for a long time told the journalist that based on the actual supply of tungsten ore in China in recent years, which is estimated to be around 120,000-130,000 tons per year, about 20% of this quantity "does not come with invoices." "These non-compliant ores cannot be invoiced and thus cannot circulate in the market." "Moreover, most of the ore within the quota belongs to large groups and can be internally consumed, hardly circulating in the market." The statements made by the industry insiders were confirmed by the personnel from Xiamen Tungsten and Chongyi Zhangyuan Tungsten. The journalist, in an investor capacity, learned from these two companies that, "The demand for deep processing at the backend of the company is particularly high, with the current self-sufficiency rate of tungsten ore at only 20%," and, "The self-sufficiency rate in 2024 is about 20%, with the remaining shortfall needing to be supplemented through external purchases." In response to this, SMM tungsten and molybdenum analyst Li Jiahui told the journalist that since the beginning of the year, the crackdown on illegal mining and the inspection of unregulated mining activities in the main tungsten-producing areas such as Jiangxi has caused a decrease in the operating rate of some small mines, leading to a tense situation in the supply of tungsten ore concentrates, coupled with increased demand for restocking in the APT and powder processing sectors. This has further exacerbated the supply-demand contradiction and stimulated the surge in prices. According to incomplete statistics obtained by the journalists, some areas in Jiangxi, a major tungsten ore-producing region, have intensified the crackdown on illegal mining. For example, in December 2025, Jiangxi Hukeng Tungsten Mining issued a notice encouraging the reporting of illegal mining activities. In January of this year, Dayu County disclosed four typical cases of illegal mining of tungsten ore and Tieshanlang Tungsten Mines, in collaboration with local authorities, cracked down on illegal mining activities. Public information shows that China continues to control and allocate quotas for tungsten mining. According to institutional statistics, the first batch of tungsten mining quotas for 2026 decreased by 6.45% compared to the previous period, indicating a trend of slowing down quotas in the long term. Data shows that the proportion of overmining in tungsten production in China has been continuously decreasing, with the proportion of overmining accounting for 35.78% in 2015, dropping to 12.63% in 2024. It is important to note that as a rare minor metal, tungsten has long remained in a state of tight supply-demand balance, and any disruption in the ore sector can have a significant impact on market prices. Smooth price transmission with decreasing intensity but varying resilience in downstream enterprises A representative from Xiamen Tungsten told the journalist that tungsten metal is an indispensable "hard currency" in the backend manufacturing sector and possesses an essential property as a consumable material in the industrial tool field. The overall cost in the industrial chain is not high. At present, the price increase at the ore end is smoothly transmitted downstream, but the sustainability of this transmission at continued price increases cannot be predicted at the moment. A representative from China Tungsten and Hightech Materials also mentioned to the journalist that the company has a variety of hard alloy products in the downstream, with price adjustments differing across product categories. The prices of blade products have seen multiple increases this year, each with different strategies. In its performance forecast released at the end of January, Guangdong Xianglu Tungsten mentioned that the tungsten metal raw material prices continued to rise throughout 2025, and the supply-demand situation in the tungsten market improved compared to previous years. The company has increased its bargaining power for tungsten products, and the price increase in raw materials has been smoothly transmitted to downstream products. Having worked in the tungsten industry chain for over a decade and currently serving as the chief analyst at R.C. Information, Wang Dong told the journalist that due to factors such as the rapid increase in capital utilization and price, the speed of price transmission within the industry chain has accelerated, mainly focusing on fast in and fast out. The midstream hard alloy segment has less bargaining power, and it is expected to eliminate some small and medium-sized manufacturers in the future. Li Jiahui stated, "Currently, the transmission of tungsten prices downstream is generally smooth but gradually weakening. The transmission from raw materials to APT and powder processing is relatively fast, and top-tier enterprises in high-value-added hard alloys and high-end cutting tools can smoothly pass on the costs, while lower-end processing sectors have weaker resilience and face greater resistance in the transmission." It is worth noting that among tungsten downstream demand, hard alloys account for about sixty percent, with about half of the hard alloys used in the cutting tool sector. A tool manufacturer recently told the journalist that they are experiencing an increase in demand for high-end products downstream, with order scheduling extending from over a month to 2-3 months. According to institutional statistics, tungsten raw materials have a low share in the value of cutting tools, with tool costs accounting for a small proportion of manufacturing costs, leading to a significant reduction in the impact of rising tungsten raw material prices on the end process. Tungsten raw material costs account for about 10%-15% of the price of cutting inserts, of which 80% is attributed to manufacturing service fees and tool manufacturers' profits, and most waste carbide inserts are recycled, with prices approximately 60%-70% of the market price of tungsten carbide powder. Short-term resolution of supply-demand contradictions remains difficult, caution against potential high pullback Regarding the current market situation, Zhang Wei expressed optimism about future tungsten prices. He told the journalist that tungsten is an essential raw material in the "industrial backbone" and has a relatively low overall cost in the final industrial products, with customers having a generally high acceptance of high prices. From the perspective of supply at the ore end, with limited new capacity being added and restrictions on quotas domestically, as well as a slower pace of new mine development overseas, the short-term supply-demand contradictions are difficult to resolve. Recently, representatives from CMOC Group Limited (603993.SH) told the journalist that the long-term tight supply of tungsten raw materials, combined with the government's constraints on mining quota allocation, have provided strong support for tungsten prices. Traditional industries and high-end manufacturing sectors have continued to increase their demand for tungsten, and emerging sectors are expected to further drive demand for tungsten, thus, maintaining tungsten prices in a historically high range. Li Jiahui stated, "In the short term, the scrap tungsten market has entered a holiday state before the Spring Festival, with both market recycling and transaction volumes significantly decreasing, exacerbating the tense situation of raw material shortages for smelters. After the holiday, the entire industry chain will face restocking demands; as the two sessions approach, the mining operation rate is unlikely to see significant growth, and the supply-demand contradictions from downstream resuming production and operation may continue. In the medium to long term, with limited global growth in tungsten mines and the tightening control policies domestically, while tungsten application in military and new energy sectors maintains an upward trend, the tight supply-demand situation will support the center of tungsten prices to remain predominantly strong." "The price increase pace is too rapid; we originally expected the current prices in the second quarter of this year, but they have already exceeded previous expectations," Wang Dong expressed. He anticipates that there is still some room for further price increases in the short term; however, such rapid surge trends are unlikely to be sustained at high levels for too long, and by the beginning of the second quarter, tungsten prices may face adjustment pressures. Regarding the expectations for the allocation of tungsten mining quotas in China in 2026, Wang Dong mentioned that in recent years, some tungsten mines with long operating periods in China have found it challenging to exhaust their quotas. With the strategic resource nature of tungsten metal becoming prominent, it is expected that the overall quota allocation for mines in China will further contract this year. Stimulated by the high tungsten prices, mining production enthusiasm may increase, which could potentially alleviate the temporary supply tightness. Regarding the future market, some industry insiders expressed caution to the journalist, saying, "This year's accelerated price increase pace has pushed market sentiment to extremes, and there could be a high pullback in the future."