Tight supply in Germany and export controls in China in addition to geopolitical tensions have reshaped the global tungsten bar market in March, driving prices higher and prompting strategic moves across Europe and Asia.

Key Takeaways

• With raw material suppliers and smelters holding back, supply-side constraints fueled a rise in Chinese tungsten bar prices in March.
• Despite sanctions, China is significantly increasing its tungsten bar exports to Russia, addressing crucial needs in Russia's defense sector.
• Tungsten bar prices in Germany rose in March as buyers responded to growing uncertainty and China’s export controls by securing long-term contracts.

Tungsten bar demand from China has surged, especially for the international market. Since the start of the Russian - Ukraine conflict, China has significantly increased its Tungsten exports to Russia, becoming its top exporter and surpassing the European counterparts. 

Despite western sanctions, Beijing has maintained the flow of dual-use goods, including Tungsten, crucial for Russia's defense sector. With abundant tungsten resources, strong technical expertise, and a significant domestic market, Chinese tungsten cemented carbide companies are strategically positioned to capture the high-end cutting tool market. The current challenges faced by US high-end cutting tool manufacturers present a clear opportunity for Chinese firms to rapidly fill this market gap, particularly in demanding sectors like aerospace and automotive manufacturing.

The Tungsten bar market experienced tight supply conditions in March as raw material suppliers are mainly refraining from selling. Additionally, many smelters have paused offering quotes, opting to monitor market movements. Despite this approach, there has been an uptick in market inquiries. 

Domestically, the strategic management of tungsten resources ensures a stable supply, strengthening the tungsten value chain. Owing to these factors, Tungsten bar prices in China surged by 6% m-o-m in March. Despite supply-side support, market confidence remains largely intact, with the industry holding a generally positive long-term outlook.

Germany saw tungsten bar prices rise by 2.8% in March due to a supply crunch, highlighting Europe's wider scramble for crucial minerals amid growing global supply concerns. EQ Resources (EQR) has secured five long-term deals to sell its product, expected to bring in around USD124 million over the next two years. The significance of the agreement, particularly with European consumers, is amplified by China’s export halt on various tungsten products. Faced with uncertainty from China's tungsten bar export controls, downstream customers globally are increasingly seeking long-term offtake agreements to secure future supply amidst growing demand.