Tungsten prices have climbed to record levels since China, the world's dominant producer of the strategic metal, tightened export controls in 2025, sparking growing concern across industrial and defence supply chains.

The restrictions have compelled manufacturers worldwide to seek alternative sources of supply as access to the critical raw material becomes increasingly uncertain.

Reflecting the growing importance of the market, CME Group has announced plans to launch a dedicated tungsten futures contract by early next year, seeking to improve price transparency and help industry participants manage rising volatility.

Known for possessing the highest melting point of any metal at 3,422°C, tungsten combines exceptional hardness, approaching that of diamond, with a density comparable to gold.

Those characteristics make it indispensable for industrial cutting and drilling tools, mining equipment, automotive manufacturing and aerospace production.

The metal is also used to create highly durable alloys capable of withstanding extreme heat and corrosion, making it especially valuable for aerospace, energy and defence applications.

Global tungsten production is estimated at approximately 85,000 tons annually, a relatively modest figure compared with major industrial metals such as copper and nickel. At current market prices of roughly $230 per kilogram, CME Group estimates the global tungsten market is worth more than $20 billion.

China remains overwhelmingly dominant across the tungsten supply chain. The country accounts for around 79 per cent of global mine production, while Vietnam, the second-largest producer, contributes just 3.5 per cent.

According to US estimates, China also controls roughly 53 per cent of global tungsten reserves.

Its influence extends even further into processing and refining, where Chinese facilities account for approximately 86 per cent of global output, giving Beijing substantial leverage over international supply.

The tightening of export controls came amid wider geopolitical and trade tensions. China introduced stricter licensing requirements for several critical minerals, including tungsten, while also curbing domestic mining quotas.

The resulting supply squeeze has pushed international prices dramatically higher, with some benchmark tungsten products rising from below $500 to more than $3,000 per metric tonne.

The impact is already being felt by manufacturers dependent on tungsten-based tooling and machinery.

Last April, Nicolas Dufourcq, chief executive of France's public investment bank Bpifrance, warned of mounting pressure on European industry.

"Tungsten is the key metal used in metal-cutting tools, which must be replaced regularly. Over the past nine months, we have therefore been using our old tools," he said.

He added that manufacturers attempting to purchase replacements were effectively being told by suppliers: "you're going to buy Chinese cutting tools".

Governments and companies are now accelerating efforts to diversify supply chains and reduce dependence on Chinese material. Among strategic mineral initiatives backed by the European Union, five projects involve tungsten production, refining or recycling.

These include Spain's El Moto mine, operated by Abenojar Tungsten and expected to begin production in early 2029, as well as the Borralha project in Portugal.

In France, attention has returned to the former Salau tungsten mine in the Ariège region, with business leaders increasingly framing its potential reopening as a matter of national sovereignty.

Elsewhere, Australia's historic Dolphin Mine on King Island is also being revived.

Originally opened in 1917, the operation shut down in 1992 after years of depressed prices driven by abundant Chinese supply.

Today, however, the strategic environment has changed markedly.

"The main challenge is ensuring security of supply outside of China. This makes our project an important part of the equation," said Kevin Pallas, head of Group 6 Metals, which owns the mine.

Industry experts note that increasing mine production alone will not solve the problem because much of the world's refining and processing capacity remains concentrated in China. Tungsten is sometimes referred to as a "war metal" because of its role in military applications, particularly armour-piercing ammunition and other advanced weapons systems.

However, defence uses represent only a portion of total demand.

According to Pallas, military applications account for roughly 13 per cent of annual tungsten consumption. Most demand continues to come from broader industrial sectors, including mining, construction, manufacturing and energy.

Analysts behind the CyclOpe commodities report believe those sectors will remain major growth drivers through 2030, supporting strong long-term demand even as countries race to build alternative supply chains and reduce their dependence on China’s dominance of the tungsten market.

Agencies