China's dominance in global tungsten production, accounting for over 80% of the supply, has placed the country in a strategic position amid escalating tensions with the US. Beginning in early February 2025, China enacted export controls on 25 types of rare metal products and technologies, a response to US tariff increases.
These restrictions have already begun to benefit upstream metal material suppliers, such as Lianyou Metals, as they experience price hikes. While the initial expectation was that China's actions would specifically target the US, industry insiders suggest that Japan and South Korea are likely to bear the brunt of these export controls.
Export controls already leading to price increases
On February 4, the Ministry of Commerce of the People's Republic of China (PRC) and the General Administration of Customs of the PRC jointly announced the implementation of export controls on tungsten, tellurium, bismuth, molybdenum, indium, and other rare metals and their technologies.
Since China produces over 80% of the world's tungsten supply, and tungsten is one of the key raw materials for national defense, aerospace, and basic industries, the export control measures have shocked international companies, which are now actively seeking sources of tungsten outside of China.
Lianyou Metals' General Manager, Yung-Chung Wu, stated that the company has increased its export price of sodium tungstate, a key raw material for tungsten-related products, by nearly 10% from January, and based on the 30-day production cycle, price increases are expected to show effects starting in March. The company is also open to further price hikes.
Wu explained that these measures are not a full export ban but rather controls on exports, meaning businesses must apply and register before exporting. China has long imposed export controls on tungsten, requiring a qualification review for exporters, and currently, only 18 companies in China are authorized to export tungsten raw materials.
Industry players believe that under the backdrop of the US-China trade war, China's strengthened export management and the requirement for companies to reapply for export qualifications, with individual applications per company and target country, mark a shift from the previous system of annual quota management.
Impact not limited to US
Although initial expectations suggested that China's export controls were primarily targeting the US, Wu pointed out that the US is not a major recipient of China's tungsten exports, with only about 1,000 tons shipped annually in recent years. The policy is more likely to impact Japan and South Korea, which not only have a much higher demand for Chinese tungsten but also supply tungsten-related products to the US. This shift in focus underscores the complex dynamics of global supply chains and the far-reaching consequences of China's strategic decisions.
The US primarily sources its tungsten from Canada, and for some American companies, the 25% tariff on Canadian imports has become a greater concern than China's recent export controls.
Large American companies still maintain some tungsten trade with China, particularly in sodium tungstate and tungsten oxide, but imports have been gradually decreasing in recent years. In contrast, Japan and South Korea continue to import larger quantities.
Regarding the potential market price fluctuations, Wu observed that while the price has risen by about 10% compared to January, international market prices have not experienced significant volatility, as the market is still observing the situation. China's export review process takes 6 to 8 weeks, and currently, no companies have applied for export qualifications. It is expected that Chinese-supplied tungsten will be hard to find in the global market until late April.
What China wants to achieve
The industry believes that China's long-term development strategy aims to export high-value-added products rather than raw materials. While the price of raw tungsten is high, its value can increase many times over once processed into advanced products. Thus, China hopes to improve industry competitiveness through this approach and encourage international companies to set up factories in China for processing rather than simply exporting raw materials.
Lianyou Metals' main product is sodium tungstate and it ranks among the top five exporters globally, with an annual export volume of around 2,000 to 3,000 tons.
Wu added that global demand for sodium tungstate is growing. Companies in Japan and the US have started inquiring about raw material supplies due to concerns about future supply chain uncertainties. They are not only worried about China but also US policies, prompting them to expand procurement to ensure a stable supply.
Wu also noted that China's recent export controls have already begun to affect market supply. Orders have surged in the first half of the year, but the production process and raw material supply operate on a fixed cycle. At present, factories are running with minimal finished product inventory, forcing them to prioritize orders based on available production capacity.
By the end of the first quarter, this surge in demand is expected to significantly boost profit margins, primarily driven by the established upward trend in sodium tungstate prices. However, fluctuations in raw material costs, particularly from recycling, remain limited, further stabilizing the price momentum.
Article edited by Vyra Wu
