Tungsten Carbide Prices Surge 460% as China Tightens Export Controls

Tungsten carbide, the hardest engineered material used in industry after diamond, is facing a deep supply shortage and a historic price surge that began in February 2025 and accelerated sharply through the first half of 2026. The material is a compound of tungsten and carbon, and it is prized for its extreme hardness, high melting point and resistance to wear. It is the core raw material for cutting tools, drill bits, milling cutters, mining and drilling equipment, wear-resistant parts, dies and moulds. It is also used in armor-piercing ammunition, aerospace components and high-precision machining, which makes it a strategic dual-use material for both civilian manufacturing and defense.

The crisis is rooted in China, which accounts for roughly 79 percent of global mine production at about 85,000 metric tons per year. On February 4, 2025, China's Ministry of Commerce introduced export licensing requirements for tungsten products, replacing predictable supply with a discretionary permit system. The situation escalated on January 6, 2026, when Beijing activated its 2026 Catalogue of Dual-Use Items and Technologies, which explicitly placed tungsten oxides and carbides under licensing control and prohibited exports to Japanese military-related end-users. A whitelist system was set up for 2026 and 2027, granting export rights only to a small number of state-favored producers and freezing out independent traders.

The price impact has been extreme. Tungsten carbide powder rose from about 311 yuan per kilogram at the end of 2024 to roughly 1,750 yuan per kilogram by late February 2026, an increase of about 463 percent. In dollar terms, tungsten carbide powder now trades around 180 dollars per kilogram, against a typical range of 110 to 180 dollars per kilogram for 2026. The European APT (ammonium paratungstate) benchmark reached about 2,250 dollars per metric ton, a rise of more than 550 percent since the controls began. For tool manufacturers buying powder on the open market, raw material costs have climbed to about 4.6 times the level of a year earlier.

Several forces are keeping the market tight. Ore grades in China keep declining, environmental rules have tightened, mining quotas have been cut, and defense-related consumption is rising fast, which puts the industrial and military sectors in direct competition for the same supply. Demand from aerospace, automotive tooling, mining and electronics remains firm, and buyers are stockpiling ahead of further increases. As of early 2026, spot inventories had fallen below 15 days of supply in many regions.

The shortage is now structural rather than temporary. Chinese exports of ammonium paratungstate (APT), the precursor for specialised tungsten processing, dropped close to 70 percent from 782 tonnes in 2024 to 243 tonnes over the first eleven months of 2025, and APT exports fell to zero in January and February 2026. Exports of controlled tungsten carbide and tungsten powder to Japan also fell to zero in February 2026. Major banks forecast that the global supply gap will exceed 17 percent of demand between 2026 and 2028, which means the tight balance is unlikely to ease and may even worsen.

For downstream buyers the consequences are real. Carbide tool and machining firms face squeezed margins, possible production delays in just-in-time environments, and a clear shift in bargaining power toward suppliers with secure raw material access. Many are responding by building strategic stocks, increasing the share of recycled tungsten, locking in long-term contracts and exploring material substitution. The market is expected to stay elevated through the rest of 2026.