Tungsten crunch can be fixed before prices spike further: BMO

MINING.COM Editor | February 23, 2026 | 

Tungsten is a cornerstone of heavy industries, though it often receives little public attention. (Stock image by Kalyakan.)

Tungsten prices have surged fivefold over the past year as prolonged underinvestment and tightening Chinese supply push the market toward what analysts warn could become a severe global shortage.

In a note published on Monday, BMO Global Commodities Research analysts George Heppel and Helen Amos say the world has “sleepwalked” into a tungsten crunch, driven by persistent ore grade decline, environmental restrictions and a lack of new mining investment. With global inventories critically low and another deficit forecast for 2026, they expect tightness to persist.

Tungsten is a cornerstone of heavy industry, though it often receives little public attention. Tungsten carbide, prized for its extreme hardness and density, is essential in machine parts, drill bits and hard-facing materials. In many applications, it is close to irreplaceable, making the metal a key enabler of manufacturing, mining and defence.

China dominates the market, accounting for roughly 75% of global supply. Production has stagnated in recent years as ore grades decline, environmental controls tighten and Beijing has moved to restrict exports of dual-use tungsten. As of early 2026, Chinese, exports have plummeted, with some, such as Ammonium Paratungstate (APT), falling to zero in late 2025. As a result, ammonium paratungstate prices broke out of their long-term average of about $300/t in 2025 and now trade around $1,775/t, according to Fastmarkets.

BMO expects 2026 to be a pivotal year. With stocks depleted and supply growth constrained, the market appears headed for another deficit. That dynamic, the analysts argue, is likely to keep prices elevated.

Five options

The bank outlines five potential mechanisms that could eventually rebalance the market, though none offers a quick fix.

A meaningful expansion of Chinese mine supply appears unlikely in the near term due to grade challenges and environmental limits, although projects such as Dahutang could add material volumes over time. Outside China, several projects are advancing, but new mines typically take years to permit, finance and build.

Artisanal mining, which accounts for about 6% of global supply, may respond to higher prices. BMO expects some short-term growth in this segment, but not enough to materially replenish depleted inventories.

Recycling presents another avenue. While there is limited scope to significantly increase recycling rates in western markets, China could expand secondary supply over time if it builds out collection and processing infrastructure. Even so, this would require investment and time.

Demand destruction is also possible, particularly at current price levels. However, substitution is challenging because of tungsten’s unique properties. The analysts identify limited areas where users might switch materials, but they do not expect widespread replacement.

High price cure

In the near term, BMO believes the market will balance through a mix of artisanal supply growth and some demand destruction. That adjustment, however, will not be enough to restore comfortable inventory levels. Over the longer term, the analysts argue that sustained higher prices will be required to incentivize new mine development.

“The cure for high prices is high prices,” they write, adding that meaningful investment in mined supply will likely occur only at price levels well above historical norms.

With reindustrialization and defence spending accelerating in the US and elsewhere, tungsten demand is set to grow. BMO expects the metal’s supply challenges to keep it firmly in the spotlight of critical minerals strategies in the years ahead.