Tungsten prices have begun to retreat in Europe, but market participants warn that months of elevated costs have already weakened the competitiveness of producers outside China.
Tungsten prices increased sharply this year following China's restrictions on exports of key tungsten products.
The Argus duty unpaid Rotterdam assessment for ammonium paratungstate (APT), an intermediate product used to produce tungsten powder and carbide materials, has risen by nearly 500pc year on year following sharp increases since China imposed export controls in 2025.
But resistance to the price surge has strengthened in Europe in recent months. Manufacturers of tungsten products and end consumers have argued that they cannot sustain the higher costs. As a result, on 11 August the assessment fell $160/metric tonne unit (mtu) to $2,780-3,100/mtu, which was the first decrease since April. European tungsten concentrate prices also declined on 13 August to $2,400-2,600/dry mtu in-warehouse Rotterdam from 2,400-2,800/dry mtu. But market participants said the decrease was too small to significantly improve trading conditions.
"A small decrease is something, but we cannot compete with China at these levels," one European participant said.
The pricing disparity is becoming increasingly visible in the tooling sector, one of the largest consumers of tungsten carbide, where the metal is used in cutting tools, drills or milling cutters.
European manufacturers said Chinese competitors continue to benefit from lower tungsten costs, allowing them to offer finished tools at prices that competitors outside China struggle to match.
The gap between Chinese domestic and European prices remains substantial. APT prices in China were assessed at Yn600,000-610,000 ($1,008-1,025/mtu) on 20 August, almost a third of the European price, and the Chinese market has been in a downtrend since April.
"We lose more and more orders as Chinese producers go into the market with tools priced 50pc lower," a supplier of tungsten powder in Europe said. The competitive pressure is raising concerns that more business will migrate to China if market conditions fail to improve.
"If this market doesn't begin to make a meaningful and sustainable turn, the entire industry is at risk of China dominance," a US consumer of tungsten products told Argus.
Impact spreads through cobalt
The disruption is also spilling over into related raw materials markets.
Market participants reported that some tool manufacturers in Japan have reduced production because of elevated tungsten prices, and the lower output is reducing purchases of cobalt powder, which is used as a binder in cemented carbide.
Cemented carbide combines tungsten carbide, valued for its hardness, with cobalt, which binds the material together. In cemented carbide, tungsten typically accounts for around 70pc of the material and cobalt the remaining 30pc. Although hard metals and cemented carbides account for only around 9pc of global cobalt demand, according to industry estimates, market participants are concerned that weaker carbide production could weigh on cobalt consumption.
The greater risk, as with tungsten, is a relocation of carbide manufacturing and associated cobalt demand towards China, as producers outside the country struggle to compete on costs, market sources told Argus.
