Orient Securities has released a research report indicating that the rigid nature of global tungsten supply is unlikely to reverse quickly in the medium term. The growing trend of nations actively stockpiling and protecting strategic resources is expected to continuously reduce the total volume of tungsten available in global circulation, thereby tightening supply constraints and amplifying price elasticity. With rising "critical mineral anxiety" and "expectations of prolonged geopolitical conflicts," the scope for excess tungsten stockpiling on a global scale is expanding. The firm believes that the combination of rigid supply, stockpiling demand driven by long-term geopolitical games, and the approaching peak season creates a solid foundation for a tungsten price rebound during this period.
Supply dynamics: Policy-driven rigidity with overseas projects still years away
On the domestic front, the Ministry of Natural Resources has already issued the second batch of tungsten mining quotas for 2026. The second batch for Heilongjiang Province amounts to 200 tonnes, allocated to the Yangbishan Iron Mine (the first batch was 100 tonnes), with limited incremental additions. The firm projects that the national mining quota for 2026 will see only a slight year-on-year increase. At the same time, intensified environmental and safety supervision is driving capacity exits from small and medium-sized mines, while illegal mining activities are being effectively curbed. Under the triple constraints of strict enforcement against violations, compliant mines operating near full capacity, and declining resource quality, long-term output growth is unlikely to be rapid.
Overseas, the Sangdong Mine in South Korea—the largest non-Chinese tungsten project globally—commenced Phase 1 production in early 2026 with an annual output of 2,300 tonnes of tungsten concentrate, with Phase 2 (planned to increase capacity to 4,600 tonnes annually) expected to come online in 2027. Additionally, the U.S. government has invested nearly $1.6 billion via EXIM/DFC in the Cove Kaz super tungsten project in Kazakhstan. Once fully operational, Cove Kaz is projected to produce 12,000 tonnes annually—roughly 15% of current global mine output—but engineering studies, mine and processing plant construction plans are not scheduled for completion until end-2027, with groundbreaking after that, making it difficult to establish effective supply scale before 2030. In the medium term, the rigidity of global tungsten supply is unlikely to reverse quickly.
On the policy front, the "Implementation Regulations for the Mineral Resources Law," effective in China from June 2026, lists tungsten as a national-level strategic mineral resource. Combined with special regulatory policies issued by the National Mine Safety Administration, this further raises domestic compliance costs. Regarding export controls, China implemented a licensing system for tungsten-related exports starting February 2025, later upgraded to a quota review plus joint approval system. Between February and June 2026, a total of 80 Japanese entities were placed on control and watch lists in two batches, effectively interrupting tungsten exports to Japan and continuously compressing overseas supply availability. Looking ahead, the U.S. plans to ban tungsten scrap exports starting August 27, which, if strictly enforced, could impact the global recycled tungsten supply landscape. It is evident that nations actively stockpiling and protecting strategic resources has become a trend, which will likely keep shrinking the pool of accessible tungsten globally, reinforcing supply constraints and amplifying price sensitivity.
Demand: AI computing cycle and defense stockpiling create dual growth drivers
On the AI and semiconductor front, as major global cloud providers roll out capital expenditure plans for 2026, the expansion of AI servers and data centers is driving stronger demand for tungsten-based materials, including high-end machining tools, PCB micro-drills, and tungsten hexafluoride (WF6). In the defense sector, according to CCM data, global military tungsten consumption reached 3,000 tonnes in 2025, up 36% year-on-year, driven by geopolitical tensions. Orders for armor-piercing projectile cores and aero-engine components are booked through 2027. The protracted nature of conflicts such as Russia-Ukraine and Israel-Iran is accelerating defense stockpiling in Europe and the U.S. Project Blue forecasts that defense-related tungsten demand will rise from its current ~12% share to ~15% by 2027-28. The escalating "critical mineral anxiety" and "expectations of prolonged geopolitical conflicts" are opening up room for excess tungsten stockpiling worldwide.
Medium-term outlook: Overseas tool price hikes signal a potential seasonal rally
Domestic tungsten concentrate prices, after falling over 60% from the March peak of one million yuan, have been stabilizing in August, with leading companies' long-term contract purchase prices slightly raised month-on-month. Looking to the second half of the year, cemented carbide and cutting tools are expected to recover as the manufacturing peak season approaches in September-October. With overseas tool manufacturers again raising prices intensively, the cost-performance ratio of Chinese high-end tools is rapidly improving. Downstream demand is likely to be released during the peak season, potentially catalyzing a rebound. Risks include a potential shift toward looser policies and downstream demand falling short of expectations.