Key Findings
- Extreme Price Volatility Signals Structural Supply Crisis
- Defense Budget Expansion Directly Amplifies Tungsten Demand Pressure
- China's Export Controls Create Weaponized Supply Leverage
- Processing Bottlenecks Concentrate Chinese Control Beyond Raw Materials
- Allied Defense Industrial Base Resilience Initiatives Remain Nascent and Underfunded
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.
- Extreme Price Volatility Signals Structural Supply Crisis
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
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
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
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
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.