Secret War for Tungsten Fuels a Permanent Supply Shortage

A covert struggle for tungsten, one of the world's most critical strategic metals, is playing out in U.S. scrapyards and parking lots. Chinese buyers are reportedly paying up to five times the market price to secure scrap tungsten from worn-out industrial tools and mining equipment, testing long-standing supplier relationships with American recyclers. This aggressive buying is described by industry executives as a 'secret war' for control of a resource vital to military and industrial applications.

This intense competition has sent U.S. tungsten scrap prices soaring 350% since May 2025. While prices pulled back after a parabolic run, the bullish trend has reaccelerated recently. The shortage is structural, not temporary, driven by China's dominance of global production, its imposition of export restrictions, and the aging of its own mines. Despite environmental rules, Chinese demand is being met indirectly through scrap processed in third countries like the Philippines and Vietnam.

Tungsten's unique properties—the highest melting point and exceptional hardness—make it nearly irreplaceable for munitions, aerospace components, and industrial cutting tools. This means demand is inelastic; when supply tightens, prices can spike dramatically without an easy substitute. The current scramble highlights a critical vulnerability in Western supply chains for materials essential to national defense and advanced manufacturing.

The situation creates clear winners and losers. Companies and funds with exposure to tungsten mining, recycling, and broader strategic metals stand to benefit from sustained higher prices and increased geopolitical focus on supply security. Conversely, manufacturers reliant on tungsten inputs face rising costs and potential supply disruptions. The debate in Washington over banning scrap exports underscores the tension between securing domestic supply and the current lack of U.S. refining capacity to process it all.