Reasons for the rise in tungsten prices

1. Supply-Side Contraction (Core Driver)

China's Environmental Protection Policies and Work Safety Rectification:

China is the world's largest tungsten supplier, accounting for the vast majority of global reserves and production.

In recent years, the Chinese government has continuously implemented strict environmental regulations and mine safety standards. Many small, highly polluting mines that fail to meet these requirements have been closed or rectified, resulting in restrictions on the mining of tungsten concentrate.

This policy-driven supply tightening is one of the most fundamental factors driving the long-term strength of tungsten prices.

Production Fluctuations in Major Producing Countries:

In addition to China, Vietnam, Russia, and Bolivia are also significant tungsten producers. Political stability, policy changes, or mine-specific issues (such as declining ore grades and rising mining costs) in these countries can affect global supply.

For example, accidents or labor disputes in any mine could trigger market concerns about supply disruptions.

Supply Chain Bottlenecks and Rising Costs:

Rising global energy prices (such as electricity and fuel oil) have increased the overall costs of tungsten mining, beneficiation, and smelting, thereby supporting the bottom line of tungsten prices.

Fluctuations and delays in international logistics costs have also impacted the timely delivery of tungsten products, exacerbating the tight supply situation.

II. Demand-side Recovery and Growth
Recovery of High-end Manufacturing:

Tungsten carbide is the primary consumer of tungsten (accounting for approximately 60%) and is widely used in cutting tools, mining drilling, wear-resistant components, and other applications.

With the recovery of global manufacturing, particularly in the automotive, aerospace, and machining industries, demand for cemented carbide tools continues to grow, driving tungsten consumption.

Driven by New Energy and High-tech Industries:

Photovoltaic Industry: Due to its high strength and fine wire diameter, tungsten wire is gradually replacing carbon steel wire as the next-generation diamond busbar for silicon wafer cutting, and demand is growing rapidly. This has been a very strong new demand area in recent years.

Electronics Industry: Tungsten is used in sputtering targets in the semiconductor industry, electrodes and counterweights in the microelectronics industry, and other applications.

Defense Industry: Tungsten is a key strategic material in the manufacture of high-performance weaponry such as armor-piercing projectiles. Countries are increasing their procurement to meet strategic reserve requirements.

III. Strategic and Financial Attributes
Strategic Resource Status:

Tungsten is designated as a key strategic mineral or raw material by major global economies, including China, the United States, and the European Union. Its irreplaceable nature (high density, high melting point, and high hardness) and its importance in high-end industrial and military fields have led countries to prioritize the security of its supply chain.

This strategic status has led to national stockpiling, further reducing market liquidity and driving up prices.

Speculation and Market Sentiment:

Against the backdrop of expected supply constraints and growing demand, traders and investors may engage in stockpiling or speculation in the futures market, amplifying price fluctuations and accelerating price increases in the short term.

IV. Geopolitical Factors
Changes in the global trade landscape and regional conflicts (such as the Russia-Ukraine war) may affect tungsten supply or transportation routes in specific regions, sparking market concerns about supply chain stability and resulting in price premiums.

Some countries are seeking to diversify their supply to reduce their dependence on a single source (particularly China), but this is unlikely to change in the short term, and this process itself will also generate new demand fluctuations.

Summary
In summary, the current round of tungsten price increases is the result of a combination of rigid supply constraints and structural demand growth.

On the supply side: Constrained by China's environmental protection policies, aging global mines, and rising costs, tungsten prices have minimal growth elasticity.

On the demand side: The recovery of traditional manufacturing, coupled with new growth drivers from emerging industries such as photovoltaics, new energy, and electronics, has led to continued strong demand.

Amid this supply-demand imbalance, tungsten's strategic resource attributes have further amplified price fluctuations, leading to continued price increases.