Chinese Tungsten Price Surged by over 50 Percent in 2017

Chinese tungsten price has surged more than 50 percent since July, 2017 amid growing concern about supply cutbacks in China, where about 80 per cent of the metal comes from. The Chinese government is carrying the tax law of environmental protection to cut production and curb pollution.

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

The price of tungsten in Europe has jumped 52 per cent since early July, according to Metal Bulletin. The advance has beaten all 22 major materials in the Bloomberg Commodities Index. Tungsten has gained for six straight months, the longest rally since 2012.

The European Union classes tungsten as a "critical" commodity, and the British Geological Survey places it at the top of its supply-risk list of materials needed to maintain Britain's economy and lifestyle.

In 2012, it became a flashpoint when then US President Barack Obama filed a complaint to the World Trade Organization against Chinese supply curbs.

China limits tungsten supply to about 91,300 tonnes a year, but routinely breaks its quota by as much as 50 per cent, partly because a lot comes as a by-product from mines that produce other metals such as molybdenum, Mr. Seddon said.

It seems that tolerance has gone, at least for now. China's Ministry of Industry and Information Technology issued an edict on June 6 saying producers should stick to output quotas and that those without quotas, or which exceed the quotas, should halt production. Quotas also should not be granted to companies that infringe safety or environmental rules.

“The government wants to have control," said Mr. Seddon. "Whether this carries on into next year is more difficult to predict."

The biggest consumer of tungsten is the auto industry, with about 25 per cent of supply predominately used in cutting and machining tools. It is also used in lighting, steel-making and mining. Tungsten's high density means it is also used in missiles to help them penetrate defenses.

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