Assessing the Tungsten Supply-Demand Balance: A Scramble for a Critical Metal

The scale of the disruption is stark. China, which controls over 80% of global tungsten production, has imposed a direct cap on supply. In 2025, the country cut its mining quota by 6.5%, a move that analysts say has already reduced exports by close to 40% year-on-year. This isn't just a broad market squeeze; it's a targeted policy. The controls, implemented in February 2025, require exporters to secure government permits, centralizing access and limiting volume. The impact is most acute for allies. Following a political dispute with Japan, China added tungsten products to its 2026 dual-use export controls, effectively halting shipments to Tokyo. Data shows China's APT exports to Japan fell almost 70% from 2024 to 2025, with one producer noting they have "hit pause" on all exports to the country.

This deliberate reduction in available material has triggered a violent price reaction. Ammonium paratungstate (APT), the key feedstock for tungsten metal, has hit record highs. In China, prices have climbed to $1,125 to $1,150 per metric ton unit, while in Europe, the benchmark price in Rotterdam has surged to $1,350/mtu. That's a jump of over $300/mtu in just two weeks. The price surge is the clearest signal of a market where supply is no longer meeting demand, leaving consumers scrambling for the critical metal used in cutting tools, aerospace, and defense.

Demand and the Fragile Inventory Buffer

The demand side of the tungsten equation is holding firm, supported by a mix of traditional industrial uses and new growth from technology. The semiconductor and electric vehicle industries are fueling fresh demand, with emerging applications like nuclear fusion expanding the market potential. Yet, this underlying strength is now colliding with a market where physical supply has been severed. The result is a fragile setup where depleted inventories are the critical buffer-and that buffer is nearly gone.

The most telling sign of this inventory crunch is the "price without volume" paradox in Europe. Despite APT prices in Rotterdam surging to $1,350/mtu, actual trade has stalled. In one telling week, only an estimated 20 metric tonnes of APT traded at that high price. This disconnect between valuation and reality points directly to alarmingly low stockpiles. With physical material scarce, the market is pricing in panic, but end users are hesitant to buy at such levels, creating a standoff that underscores the severity of the shortage.

This inventory depletion is not accidental. It is the culmination of years of complacency, where Western stockpiles were run down rather than replenished. As one analyst noted, the metal's strategic role in defense and advanced manufacturing-its use in armor-piercing munitions and high-end tooling-means it is a frontline material in today's conflicts. This dual-use nature provides some insulation from short-term price spikes, as governments and militaries prioritize securing supply over cost. Yet, for the broader industrial economy, that insulation is thin. The metal's critical role in cutting tools, aerospace, and automotive manufacturing means any disruption to its flow has cascading effects, amplifying the pressure on an already strained market.

The Path to Balance: Production, Policy, and Time

Restoring a balance in the tungsten market faces a long, complex road. The immediate physical constraint is clear: production outside China remains a tiny fraction of the global total. According to 2024 U.S. Geological Survey data, mine output from other nations is fragmented, led by Vietnam and Russia, and collectively accounts for only a few thousand tons annually. That's a drop in the bucket compared to China's 67,000 tons of production. This fundamental imbalance means any new supply from Western projects will take years to materially shift the market.

The critical path forward lies in advancing new projects in North and South America. Companies like GoldHaven Resources and American Tungsten are actively exploring and developing assets, with recent results from GoldHaven's Magno Property showing promising high-grade mineralization. Yet, these efforts are in the early stages. The timeline for bringing a new mine online is measured in years, not months. This long lead time creates a dangerous gap where the market must rely on existing, dwindling inventories and the uncertain whims of policy.

That policy uncertainty is the third major variable. China's export controls are not a permanent fixture but a tool serving dual purposes. They provide immediate geopolitical leverage, as seen in the halt of shipments to Japan. At the same time, they allow Beijing to build up its own strategic stockpiles. The durability of these controls is therefore in question. They may be relaxed if domestic stockpiles reach a target level or if geopolitical tensions ease. But for now, they are the primary driver of the global shortage, and their removal would be a major catalyst for price stabilization.

The bottom line is one of painful patience. The industrial economy is caught between a wall of high prices and a pipeline of supply that is years away. In the interim, the market will remain volatile, with prices likely to stay elevated as consumers and governments alike scramble to secure what little material remains. The path to true balance runs through a slow, uncertain process of project development and shifting policy, not a quick fix.

Catalysts and Risks: What to Watch

The path from today's extreme tightness to a balanced market is paved with uncertainty. For investors and users, the key is to monitor a few clear signals that will confirm whether the current supply-demand imbalance is stabilizing or worsening.

First, watch for tangible progress from new project developers. The long-term promise of North and South American mines is real, but it remains years away. The near-term signal is not production, but milestones. Look for announcements from companies like GoldHaven Resources and American Tungsten on project financing, permitting updates, and exploration results. Positive updates from the Magno Property, for instance, would validate the resource base and keep investor interest alive. Any delay or setback in these early-stage projects would only deepen the supply gap and likely keep prices elevated.

Second, the most powerful near-term catalyst will be a shift in China's policy. The current export controls are the primary driver of the global shortage. Any relaxation of these rules-whether due to a change in geopolitical stance or because Beijing's own strategic stockpiles have been built to a sufficient level-could rapidly flood the market with APT. Monitor official statements from the Chinese Ministry of Commerce and the General Administration of Customs for any easing of the license requirements or the dual-use controls. The halt of shipments to Japan, which saw exports fall almost 70%, is a stark example of how policy can abruptly alter supply flows. A reversal of that move would be a major market event.

Finally, track the strength of demand to see if new applications are materializing as expected. The semiconductor and defense sectors are cited as key growth drivers. Any data showing robust, sustained demand from these high-value industries would confirm that the underlying need for tungsten is not a temporary spike. Conversely, a slowdown in orders from these critical end-users could signal that the current high prices are beginning to choke off consumption, which would be a sign of market fatigue. For now, the dual-use nature of tungsten provides some insulation, as governments prioritize supply. But the broader industrial economy's response to these prices will be a crucial indicator of the market's resilience.

The bottom line is that the market is currently hostage to policy and patience. The next few months will be defined by signals from project developers, shifts in Beijing's stance, and the real-world uptake of tungsten in its newest applications. Watch these three fronts, and you'll see the true trajectory of this critical metal.