China clamps down on tungsten production, causing world prices to skyrocket

Tungsten, a metal vital to defense and commercial industries throughout the developed world, is surging in price across the globe, according to private- and public-sector analysts, who attribute the price surge to supply cutbacks in China.
By Sam Klein | Sep 13, 2017
Tungsten, a metal vital to defense and commercial industries throughout the developed world, is surging in price across the globe, according to private- and public-sector analysts, who attribute the price surge to supply cutbacks in China. China is the source of 80% of the world's tungsten, they said, but its tungsten exports are significantly down due to the Chinese government more strictly enforcing production quotas and shutting down some mines over pollution.

"The Chinese have been trying to impose control over the production in tungsten," Mark Seddon, senior manager at Argus Consulting (Metals), told Bloomberg. "They've used environmental policy to clamp down on non-quota production."

Tungsten prices are now 50% higher worldwide than they were just two months ago. Metal Bulletin reported that European prices for tungsten have jumped 52% since mid-July and that the price rise has been ongoing nonstop for six straight monthsits longest price-rise streak since 2012.

This worries the European Union, which designates tungsten a "critical" commodity. Automotive, lighting, and steelmaking industries all heavily rely on tungsten. And defense industries build missile parts with it because its high density enables tungsten missile parts to be durable enough to pierce through defenses.

China has an official tungsten production limit of 91,300 metric tons a year. But it has regularly exceeded the limit it by as much as 50% due to extra tungsten exiting below-the-radar as a byproduct from mines that yield other metals such as molybdenum, according to Seddon. China's Ministry of Industry announced in June that it would crack down on these extra, unauthorized tungsten-production streams and would close down any mines that fail to honor the established quotas.

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