Key Findings
- Extreme Price Volatility Signals Structural Supply Crisis [SOURCED]
- Defense Budget Expansion Directly Amplifies Tungsten Demand Pressure [SOURCED]
- China's Export Controls Create Weaponized Supply Leverage [SOURCED]
- Processing Bottlenecks Concentrate Chinese Control Beyond Raw Materials [SOURCED]
- Allied Defense Industrial Base Resilience Initiatives Remain Nascent and Underfunded [SOURCED]
Executive Summary
The global tungsten market has entered 2026 in extreme volatility, driven by China's implementation of export controls on tungsten products following US trade disputes . This supply shock exposes a critical structural vulnerability in Western defense industrial bases: approximately 90% of the world's tungsten flows through Chinese channels , while China accounts for approximately 75% of worldwide mine production . The convergence of accelerating defense budgets and constrained tungsten supply creates a strategic crisis that threatens allied military readiness and technological superiority.
Analytic Confidence: LOW — Evidence is recent but concentrated in commodity and policy domains; long-term strategic implications remain uncertain given nascent mitigation efforts.
- Extreme Price Volatility Signals Structural Supply Crisis [SOURCED]
Tungsten concentrates are currently trading at around 22,000–24,000 USD/MTU, with APT breaking the 450 USD mark and powder prices climbing to 55,000 USD/t—an increase of over 500 percent since the 2024 lows . Given depleted inventories, restricted Chinese exports and limited near-term new supply, this volatility is widely expected to persist throughout 2026 . Analysts predict a 4-6% CAGR in price levels as the defense and aerospace industries enter a new cycle of procurement .
- Defense Budget Expansion Directly Amplifies Tungsten Demand Pressure [SOURCED]
Global defence spending grew in 2025, reaching USD2.63 trillion, up from USD2.48 trillion in 2024, with spending rising in real terms by 2.5% . FY 2026 achieved a historic $1 trillion overall defense topline, and FY 2027 proposes $1.15 trillion in discretionary (28% increase) and $350 billion in mandatory bringing total resources for defense to $1.5 trillion . Tungsten consumption linked to defense applications such as helicopters, fighter jets and ammunition could increase 12% this year .
- China's Export Controls Create Weaponized Supply Leverage [SOURCED]
China's Ministry of Commerce announced on February 4 last year that export controls would be applied with immediate effect to certain forms of tungsten, including APT, following a US announcement of tariffs on Chinese imports . Since China put tungsten export controls in place in February 2025, Chinese tungsten APT exports have entered a license-based phase, causing the export volume of tungsten APT to fall almost 70% from 782 tonnes in 2024 to 243 tonnes in the first 11 months of 2025 . The combined capacity of major non-Chinese producers represents less than 15% of global demand, highlighting the structural supply gap that China export controls on tungsten exploit .
- Processing Bottlenecks Concentrate Chinese Control Beyond Raw Materials [SOURCED]
Ammonium paratungstate production represents the critical bottleneck in tungsten supply chains, requiring specialised chemical processing equipment with corrosion resistance, environmental compliance systems, and technical expertise in tungsten chemistry and purification . China's processing dominance in tungsten refining represents approximately 85% of global capacity, creating bottleneck control that extends beyond raw material extraction to include technical expertise .
- Allied Defense Industrial Base Resilience Initiatives Remain Nascent and Underfunded [SOURCED]
The Pentagon plans to spend up to $1 billion on critical minerals stockpiling, with tungsten among the materials that the US Defense Logistics Agency was said to have been looking at purchasing . In 2025, the Department of Defense announced its intent to procure up to $1 billion in stockpile materials . However, Almonty Industries is ramping up the Sangdong mine in South Korea with Phase 1 in production, and plans the US launch of "Gentung Browns Lake" in the second half of 2026: the first commercial US tungsten mine in decades, funded with 219 million USD —a fraction of defense budget scale.