A recent BMO Capital Markets report suggests that the high price of tungsten, a critical industrial metal, is likely to persist throughout 2026. This forecast stems from a structural supply crunch that has been building for over a year, creating a perfect storm in the global market.
The entire situation traces back to a single policy change. In February 2025, China's Ministry of Commerce implemented 'Announcement No. 10,' which placed key tungsten products under an export licensing system. Since China accounts for over 82% of global tungsten production, this move was a systemic shock. The administrative hurdles of the new licensing system led to significant delays and, for several months in the spring of 2025, a complete halt in exports of Ammonium Paratungstate (APT), a key tungsten intermediate.
This created a clear causal chain that rippled through the market. First, with actual export deals disappearing, Chinese FOB (Free On Board) price quotes became unreliable. By October 2025, a major price reporting agency, SMM, had to suspend its Chinese APT export price updates. This shifted the burden of price discovery to markets outside China, primarily Europe. Second, as buyers scrambled for non-Chinese supply, demand funneled into the European spot market, causing CIF (Cost, Insurance, and Freight) Rotterdam prices to spike dramatically toward the end of the year. Third, even the secondary supply from recycling couldn't ease the pressure. Prices for tungsten carbide scrap in the U.S. more than doubled in a year, hitting all-time highs and signaling that no easy buffers were left.
The issue is magnified by tungsten's strategic importance. It is indispensable in defense, aerospace, and high-performance tools, with few viable substitutes. This makes demand highly inelastic—it doesn't decrease much even when prices rise. Recognizing this, the U.S. Department of Defense has already invested in domestic tungsten projects to secure its supply chain. This policy-driven demand, combined with the structural supply bottleneck created by China, underpins BMO's view that the market will remain tight for the foreseeable future.
- APT (Ammonium Paratungstate): An intermediate product in the process of refining tungsten ore into pure metal.
- mtu (metric ton unit): A standard pricing unit for tungsten, representing 10 kilograms of tungsten trioxide (WO3) within a concentrate.
- FOB/CIF (Free On Board / Cost, Insurance, and Freight): Trade terms indicating who pays for shipping and insurance costs and when the ownership of goods is transferred.