SMM, October 15:
Since July, China's tungsten market has consolidated in a narrow range, with shrinking transaction volumes and downstream demand in the seasonal off-season. Market activity has been largely guided by long-term contract transactions. Entering September, the market expected downstream demand from sectors such as cemented carbide to improve. In early September, upstream tungsten raw material enterprises held firm on quotes, market confidence was moderate, and industry long-term contract prices remained firm overall. However, demand was slow to materialize, and market demand performance was mediocre. Some enterprises had a large backlog of long-term contract deliveries from earlier periods, reducing procurement volumes, and market transactions showed no improvement. APT enterprises were the first to initiate production cuts and destocking. Some enterprises faced cash flow difficulties and sold at discounts to secure liquidity. Before the National Day holiday, downstream stockpiling enthusiasm in China was lackluster, and market transactions hit a freezing point. Mining and smelting enterprises moved to mitigate risk by increasing shipments, resulting in panic selling in the market, with transaction prices trending downward. On the last trading day of September, SMM 65% wolframite concentrates closed at 377,000 yuan/standard tonne, down 39,500 yuan/standard tonne from the beginning of September. SMM APT closed at 550,000 yuan/mt, down 46,500 yuan/mt from early September, with spot orders in the market mainly executed at discounts to list prices. After returning from the National Day holiday, a major Chinese enterprise released long-term contract prices, but industry long-term contract procurement volumes shrank sharply. Market supply liquidity surged dramatically. Smelters, with inventory at high levels from earlier periods and fixed order volumes dropping sharply, faced a full-scale panic sell-off across the market, accelerating the decline across the entire tungsten industry chain. As of October 15, the SMM guidance price for 65% wolframite concentrates closed at 302,000 yuan/standard tonne, down 75,000 yuan/standard tonne within the month and down 71.3% from the mid-March high. APT prices closed at 470,000 yuan/mt, down 80,000 yuan/mt within the month and down 69% from the mid-March high, erasing all gains for the year.
The major bearish factors facing the tungsten market in October are as follows:
Supply side: Tungsten ore imports surged, breaking the narrative of tight domestic quota balance
In 2026, China's total tungsten concentrate mining quota remains tightened, and domestic primary tungsten ore production is mainly down YoY. According to SMM sample data calculations, China's total tungsten concentrate production in the first three quarters of 2026 fell 7.84% YoY. With tightened quota controls and ore grades declining year by year, domestic tungsten concentrate supply is unlikely to see growth in the short term. Due to safety inspections in Luanchuan and other reasons, some tungsten-molybdenum mines have been shut down for extended periods, and the timeline for new projects to reach production has lengthened. China's total tungsten concentrate supply for 2026 is expected to reach 101,000 standard tonnes, down 6.1% YoY. However, domestic mining trading enterprises have stepped up efforts to source and purchase ore overseas. From January to August, China's tungsten concentrate imports surged sharply. According to customs data, China's total tungsten product imports from January to August 2026 amounted to approximately 25,000 mt, up 116% YoY. Based on SMM calculations using actual grades of tungsten concentrate imports from various countries, China's cumulative tungsten concentrate imports in 2026 totaled approximately 17,400 standard tonnes, up 118% YoY. SMM expects China's total tungsten concentrate imports for 2026 to reach 37,000 mt, up 80% YoY, equivalent to approximately 27,000 standard tonnes, an increase of 13,000 standard tonnes YoY, effectively offsetting the decline in domestic tungsten concentrate production.
Smelting: Smelters hold high inventory, and increased working capital needs have led to heavier selling pressure in the market
Since Q2, although production operating rates in the APT industry have declined, procurement volumes from downstream cemented carbide enterprises have fallen. End-users in the industry mainly consumed previous inventory in H1, and concentrated industry restocking has been slow. Inventory of mainstream smelting products such as APT has accumulated severely. According to incomplete SMM statistics, APT producer inventory in China was nearly 4,000 mt at end-September. In October, mainstream industry players reduced long-term contract procurement volumes to further release liquidity. APT shipments were blocked, corporate cash collection fell short of expectations, and working capital pressure rose significantly. To accelerate payments and reduce inventory depreciation risk, some smelters proactively cut prices to sell and cash out, markedly intensifying selling pressure in the spot market and further driving down the price negotiation center for APT and upstream tungsten concentrates.
Demand: Weak consumption in traditional application fields; export market unlikely to see growth
Against the backdrop of tungsten prices consolidating at highs in H1 2026, the trend of reduced alloying and material substitution in the cemented carbide industry has become increasingly evident—downstream tool and mold enterprises are widely adopting tungsten-reduced formulations, while ceramic tools and coated hard materials are accelerating the replacement of low and mid-end tungsten-based alloys. Coupled with sluggish manufacturing recovery, operating rates at traditional cemented carbide enterprises remain low and willingness to restock raw materials is subdued. In 2026, tungsten consumption growth in AI/PCB applications has accelerated, but total tungsten usage still accounts for a relatively small share of overall downstream tungsten consumption. Based on SMM estimates from production data of major domestic PCB micro-drill and tungsten hexafluoride producers, total tungsten consumption in the PCB micro-drill and tungsten hexafluoride segments in 2026 is approximately 3,800 mt in metal content, up about 30% YoY, accounting for only about 4.6% of China's total tungsten consumption. Traditional cutting tools, mining, and machining segments remain the main consumers, but performance is weak.
Export market: High overseas premiums under controls are unlikely to boost exports of tungsten intermediate products and finished goods
Since June 2026, the Ministry of Commerce has intensively introduced dual-use item control policies: adding 10 US military-industrial and rare earth enterprises to the embargo list; improving reporting mechanisms for violations involving strategic minerals such as tungsten, molybdenum, and rare earths; adding 40 Japanese military-related entities in two tiers, subject to comprehensive embargoes and strict case-by-case approvals; and working with customs to tighten clearance verification for precision machine tools, comprehensively strengthening export controls on strategic minerals and military-industrial equipment. Exports of dual-use tungsten intermediate products are unlikely to see growth. In January-August, China's total exports of tungsten intermediate products were approximately 9,071 mt, down about 15% YoY cumulatively. Domestic cemented carbide blade products have had a price advantage over overseas products since H2 this year, but exports have still not shown growth expectations. In January-August, China's total exports of cemented carbide blades were 1,967 mt, down 15% YoY, which may be related to weak operating rates in overseas end-user manufacturing and trade volume fluctuations caused by tariff volatility.
Overall, the rapid decline in tungsten prices this round was essentially the result of the bursting of the previous price bubble combined with a synchronized inventory cycle, as market sentiment quickly shifted from holding back supply in anticipation of higher prices to prioritizing cash. The sustained price drop triggered panic selling across the industry chain, with ore traders, smelters, and some cemented carbide supporting enterprises selling ahead of schedule to reduce risk, further amplifying the negative feedback loop. Downstream cemented carbide enterprises maintained only just-in-time procurement, no longer making precautionary restocking, with orders placed on an as-needed basis. Long-term contract negotiations dragged on with wide pricing disagreements, and while spot cargo supply increased, effective transactions remained sluggish, with most deals involving passive selling at concessions. In the short term, the market is in a phase of inventory destocking and sentiment repair, and the tungsten market in October is likely to be dominated by an accelerated bottoming-out trend. For prices to stop falling, the industry chain needs to show the following signals: first, a broader expansion of voluntary production cuts in APT and tungsten concentrates, with deep losses at the smelting stage triggering spontaneous output reductions to ease spot selling pressure; second, marginal improvement in downstream cemented carbide orders, with the traditional manufacturing mini-peak season in Q4 driving a recovery in orders for cutting tools and mining tools, as well as low-price-driven restocking at lower levels; third, a slowdown in the arrival pace of imported tungsten ore, as price inversion in China suppresses purchases of overseas ore and weakens the impact of import growth; and fourth, a contraction in recycled tungsten supply, as low prices reduce recycling incentives and lessen the substitution of recycled materials for primary tungsten.
On the export front, Chinese tungsten products now have a price advantage, and overseas pre-Christmas stockpiling presents potential growth. However, approval restrictions on dual-use items remain in place, and only non-controlled categories such as ordinary cemented carbide inserts and tungsten powder are expected to see modest volume increases, which are unlikely to dominate the market trend. Coupled with sluggish manufacturing recovery outside China, overseas APT prices have followed the decline, and the price spread between Chinese and overseas markets is narrowing only slowly.
From a medium and long-term perspective, China's policy of controlling total tungsten concentrate mining volume remains unchanged, primary ore production continues to decline, and supply rigidity persists due to falling ore grades and long commissioning cycles for new projects. Tungsten's strategic resource attributes remain intact, and supply is expected to stay in contraction through 2027. Emerging demand from downstream PCB micro-drills, tungsten hexafluoride, and PV tungsten wire continues to grow, but the volume is not yet enough to offset weakness in traditional cemented carbide consumption. Once manufacturing recovers and inventories are fully digested, the medium and long-term supply-demand tight balance logic for tungsten is expected to re-emerge.
