Chinese buyers have been scouring US scrapyards for worn drill bits and industrial cutting tools since early 2025, paying up to five times prevailing market rates for tungsten-bearing material. Scrap prices have surged 350 percent since May 2025, outpacing even the dramatic rise in primary tungsten metal. With a US defense procurement deadline approaching in January 2027, the debate over whether to restrict tungsten scrap exports has moved from niche industry lobbying to a live policy question in Washington.
Introduction
Somewhere in a warehouse or parking lot in the American industrial heartland, a deal is being struck that touches on some of the most consequential supply-chain tensions of our time. A buyer, often working on behalf of Chinese interests, is offering an American recycler several times the going rate for a bucket of worn-out carbide cutting inserts. The recycler is being asked to choose between a windfall today and the long-term availability of a metal that the US military cannot currently source from anywhere else in meaningful quantities.
This is the tungsten scrapyard war, and it matters for several overlapping reasons. Tungsten is the metal with the highest melting point of any element, used in everything from drill bits and car parts to armor-piercing ammunition and aerospace components. The United States has not commercially mined it since 2015 and depends almost entirely on imports and domestic recycling to meet industrial and defense needs. China controls roughly 80 percent of global mine production and has spent the past 18 months systematically tightening the tap through export licensing, quota cuts, and classification of tungsten products as dual-use items.
The result is a market unlike anything most commodity analysts have seen. George Heppel, vice president of commodity research at BMO Capital Markets, put it plainly: "In my 12 years working across the commodity space and dealing with a lot of weird and wonderful metals, I have never seen a market as tight as tungsten is right now, aside from maybe lithium in 2021." The difference, he adds, is that unlike lithium, there is no large pipeline of new projects ready to come online quickly.
The scrapyard bidding war is a symptom of that tightness. Understanding what is driving it, who benefits, who loses, and what the US government might do about it requires unpacking several interlocking dynamics.
The Price Story: When Scrap Outpaces the Finished Product
Price data tell the story more vividly than almost anything else. According to Argus Media figures, US tungsten scrap prices have surged 350 percent since May 2025. That is a striking enough number on its own. What makes it genuinely unusual is that tungsten metal prices themselves rose roughly 200 percent over the same period. The scrap, in other words, has been appreciating faster than the finished product it comes from.
Ammonium paratungstate, or APT, is the most widely traded benchmark form of processed tungsten and the clearest indicator of where the market stands. APT had traded in a long-term average band of around $300 per metric tonne unit for years. By February 2026, it was at approximately $1,775. By mid-March it had reached $2,250, a 557 percent climb from pre-controls levels. By late April 2026, Reuters was reporting prices above $3,000 per metric tonne unit in Rotterdam, an all-time record. Some measures placed the Rotterdam APT price at $3,185 per metric tonne unit by that point, representing a roughly 900 percent increase over the prior twelve months.
For a sense of what this means at the level of the individual scrap dealer: a five-gallon bucket of carbide inserts weighs between 80 and 100 pounds. At $8 to $11 per pound for clean material, that bucket is now worth between $640 and $1,100. Many machine shops accumulate that volume in a matter of weeks. Scrap buyers are reportedly raising their offers by $1 to $2 per pound every week. Against that backdrop, a foreign buyer offering five times the prevailing rate is not making a crazy proposal. It is making a compelling one.
The broader North American tungsten price rose from $19.35 per kilogram in the first quarter of 2025 to $34.17 per kilogram in the first quarter of 2026, a 76.6 percent increase. The global average moved from $18.38 to $28.45 over the same period. BMO analysts George Heppel and Helen Amos, writing in February 2026, described the world as having "sleepwalked" into a tungsten crunch driven by persistent ore grade decline, environmental restrictions on Chinese mining, and a decade of underinvestment in new supply outside China.
The Routing Question: How US Scrap May Be Finding Its Way Back to China
China bans direct imports of tungsten scrap, officially on environmental grounds. But banning the scrap is not the same as banning the tungsten. The material can be processed abroad into intermediate forms that China does permit to cross its borders. That distinction matters enormously for understanding the current dynamics.
Project Blue, a London-based critical minerals consultancy, has documented rising US tungsten scrap exports to recycling hubs in the Philippines, Taiwan, Vietnam, and South Korea. The Financial Times, which first reported on the scrapyard bidding war, cited this data but noted it could not independently verify whether the processed material ultimately ends up in China. The routing is plausible and consistent with patterns seen in other controlled materials, but the final destination remains difficult to confirm with precision.
What is clear is that Chinese industrial users have strong incentives to seek recycled tungsten wherever they can find it. China's own mined production fell an estimated 10 percent year-on-year in 2025, to around 61,000 tonnes, according to Project Blue, as ageing mines with declining ore grades become more expensive to operate. The 2025 first-batch mining quota came in below the prior year. China is now simultaneously the world's largest producer, largest importer, and largest consumer of tungsten concentrates, a combination that signals domestic supply is not keeping pace with domestic demand.
Oliver Friesen, CEO of Guardian Metal Resources, described the situation directly: "Since the Chinese export ban was announced there has been an over-reliance on scrap supplies, but now those are running thin, and there's growing panic over the inability to secure new primary tungsten material." That panic is what is driving Chinese buyers to American scrapyards with extraordinary offers.
Beijing's Policy Architecture: Export Controls, Whitelists, and Strategic Ambiguity
China's management of tungsten exports over the past eighteen months has been methodical. On February 4, 2025, Beijing announced export restrictions on five critical minerals including tungsten. The practical effect was immediate: APT exports from China fell from 782 tonnes in 2024 to roughly 243 tonnes in the first eleven months of 2025, a drop of nearly 70 percent. Canaccord Genuity data showed that exports of key processed tungsten products, including APT, tungsten oxide, and tungsten carbide, halted entirely in March 2025 before resuming in April at minimal volumes of around 8 tonnes.
In January 2026, China went further, classifying tungsten oxides and carbides as dual-use items, prohibiting exports to end users deemed capable of enhancing military capabilities. The same month, the Ministry of Commerce published its official whitelist of companies authorized to export tungsten for the 2026 to 2027 period: 15 firms, down from 16 applicants, including major vertically integrated players such as China Tungsten and Hightech Materials and Xiamen Tungsten. MOFCOM described the measures as protecting resources and the environment. Most Western analysts read them as something closer to strategic supply leverage.
The mechanism is subtle but effective. No outright export ban exists. Licenses are technically available. Applications are welcome. But the 45-day review window for licenses can stretch indefinitely, creating what amounts to sanctions by paperwork: no approval, no denial, just uncertainty that makes procurement planning extremely difficult for Western manufacturers.
China's overall exports of tungsten products were down roughly 40 percent last year, according to Project Blue. Chinese shipments were down 13.75 percent from January to September 2025 compared with the same period in 2024, even before accounting for the steeper declines in restricted product categories. The whitelist of 15 exporters for 2026 to 2027 effectively concentrates control over export decisions in a handful of state-connected firms, giving Beijing granular leverage over every shipment.
The US Response: Scrap Export Controls, Defense Deadlines, and the Recycling Gap
American industry has not been passive. A coalition led by Amermin, a Texas-based tungsten recycler, has written to the US Department of Commerce urging export licensing requirements on tungsten scrap bound for China, Russia, and other countries the group considers adversarial. The argument is straightforward: tungsten-bearing material collected in the US is being purchased at premium prices by foreign buyers, reducing the supply available to domestic processors and end users at a moment when domestic supply is already critically constrained.
Ryan McAdams, Amermin's chief executive, was characteristically blunt. "We've got to stop the export back to China," he said. "This is a secret war that nobody's talking about." His frustration reflects a genuine structural problem. The US has seven companies capable of processing tungsten imports and scrap, according to the USGS. But processing capacity has its own limitations. Cliff Nance, chief executive of Tungco, noted that even if scrap is retained domestically, "we don't have the ability to turn all of that scrap into a finished product." Retaining the raw material without expanding refining infrastructure only partially addresses the problem, a point consistent with my earlier analysis of Europe's processing gap in July 2026, where similar dynamics were playing out across a range of critical minerals.
The more immediate policy lever is the National Defense Authorization Act procurement deadline of January 1, 2027. Under the Defense Federal Acquisition Regulation Supplement, defense contractors will be prohibited from delivering tungsten metal powder, tungsten heavy alloy, or any finished component containing tungsten heavy alloy that was mined, refined, separated, or produced in China, Iran, North Korea, or Russia. The Defense Logistics Agency is already stockpiling tungsten in preparation, with plans to acquire up to 2,040 tonnes in fiscal year 2025. One sell-side analyst noted that the deadline will force defense manufacturers to trace the origin of raw materials through their supply chains with a precision most have never previously attempted.
The export controls debate involves genuine competing interests. Domestic recyclers want to retain the scrap. Defense manufacturers want a guaranteed non-Chinese supply chain. Industrial tooling companies and the automotive sector, which accounts for 25 to 30 percent of global tungsten demand, are watching prices at levels that threaten their own cost structures. Imposing scrap export controls would help the first two groups while potentially raising prices further for the third.
Western Supply Alternatives: Mines, Kazakhstan, and the Long Timeline Problem
The uncomfortable reality is that no Western supply alternative is available at the scale or speed the current market requires. The most advanced non-Chinese project is the Sangdong mine in South Korea, operated by Almonty Industries. Phase 1 is now commissioned and producing, with processing capacity of roughly 640,000 tonnes of ore per year and expected tungsten concentrate output of approximately 2,300 tonnes annually. A Phase 2 expansion targeting double that capacity is planned for 2027. At full capacity, Sangdong is projected to supply roughly 40 percent of global tungsten demand outside China, a significant contribution, though still well short of what would be needed to replace Chinese supply.
Almonty CEO Lewis Black has been direct about the gap between defense and civilian demand. "Almonty can produce enough tungsten for US, EU, and Korean defense demand but not enough for the entire US, EU, and Korean market, defense and civilian combined." The company is also developing the Gentung project in Montana, which would represent the first US tungsten mine to produce in a decade, with completion targeted for the fourth quarter of 2027.
The US government has made a larger bet on Kazakhstan, committing up to $1.6 billion through the Export-Import Bank and the US International Development Finance Corporation to a project that could produce approximately 12,000 metric tonnes of tungsten per year, roughly equivalent to total annual US imports. The deposit is estimated to contain around 1.4 million tonnes of tungsten resources, more than half of China's entire known reserve base. The project has drawn scrutiny because of reported investments by members of the Trump family in a company that merged with the Kazakh venture, and it remains in early development stages. TechMet CEO Quentin Lamarche described the deposits as "very early stage" requiring "a lot of time and money."
The US Department of Defense has also awarded $15.8 million to Canada's Fireweed Metals to accelerate the Mactung tungsten mine in Yukon, and the European Union has shortlisted tungsten for its first coordinated strategic stockpile. These are meaningful steps. They are not fast ones. BMO's analysts noted that the cure for high prices is high prices, meaning that only sustained elevated prices will attract the investment needed to bring new mines into production, and new mines typically take years to permit, finance, and build.
What Comes Next
The tungsten market has several moving parts converging on a relatively short timeframe. The NDAA defense procurement deadline in January 2027 is the most concrete forcing function. It will require defense contractors to demonstrate non-Chinese provenance for tungsten inputs at a moment when alternative supply remains limited and prices are at record levels. Christopher Ecclestone of Hallgarten and Company told the Financial Times that the Pentagon is willing to pay for tungsten "at all prices," which may be true, but the industrial tooling and automotive sectors that consume the bulk of global supply are not operating under the same calculus.
The Commerce Department's decision on scrap export licensing will be the next major policy development to watch. The Amermin coalition's request is on the table. Export controls on scrap would signal that the US is treating tungsten recycling as a strategic resource rather than a commodity market, with significant implications for how domestic recyclers price and allocate material. Whether such controls would actually prevent the offshore routing documented by Project Blue is a separate question, one that depends on enforcement capacity and the ingenuity of traders who have already demonstrated considerable creativity in circumventing direct restrictions.
Beyond the near term, the structural picture is one of a market that has been in deficit and is expected to remain so, with BMO forecasting the global supply-demand gap surpassing 17 percent between 2026 and 2028. Demand is projected to rise from 143,000 tonnes in 2025 to 210,000 tonnes by 2035, driven by industrial tooling, defense, and the broader electrification of transport. China's domestic supply constraints are real, not manufactured: ageing mines, declining ore grades, and genuine environmental pressure on smaller operators mean that even Beijing faces a supply management problem of its own. The bidding wars in American scrapyards are, in a strange way, evidence of that. China is not hoarding tungsten out of abundance. It is scrambling for it too, just with a larger budget and fewer institutional constraints on how it competes.