United States: New regulations on tungsten aim to secure critical mineral supplies, but industry warns of processing bottlenecks and price depressions amid restricted exports and rising domestic oversupply risks.
U.S. Aims to Retain Tungsten Supply Amid Industry Concerns Over Market Impact
The United States government is intensifying its efforts to secure critical mineral supply chains by imposing new regulations on tungsten, a vital metal used in defense, manufacturing, and high-tech industries. On August 27, the Commerce Department’s Bureau of Industry and Security (BIS) implemented a one-year rule mandating that sellers of domestic tungsten scrap and spent tungsten must allocate 100% of their monthly sales to U.S. buyers. Additionally, restrictions were placed on exports of black mass, a tungsten-bearing raw material derived from recycling processes. These measures aim to curb the outflow of tungsten materials from the U.S. market, bolster national security interests, and stimulate the development of domestic refining and processing capacity.
Despite these intentions, industry stakeholders are raising alarms about the practical challenges of complying with this new policy. The U.S. currently lacks sufficient tungsten processing and refining infrastructure to handle the dramatic increase in raw material retention. Without adequate facilities, large volumes of spent tungsten cannot be efficiently converted into intermediate compounds or finished tungsten products domestically. Several market insiders warn that this may lead to an oversupply of tungsten scrap within the U.S. market, potentially depressing prices and disrupting established business models. One trader described the regulations as a “death sentence” for tungsten exporters, while others predict companies will need to fundamentally rethink their carbide and tungsten recycling strategies over the coming year.
U.S. Export Reliance and Market Implications
The U.S. tungsten scrap sector has historically relied heavily on exports, primarily to Asian markets, for offloading excess material and achieving efficient downstream processing. In the first half of 2026 alone, exports of tungsten scrap and spent tungsten from the U.S. reached approximately 2,183 metric tons, nearly matching the total exports recorded for all of 2025, which stood at 2,202 metric tons. Principal importing countries included Japan, Germany, and South Korea, all key players in global tungsten supply chains due to their advanced tungsten processing industries. With these exports now restricted or significantly curtailed, numerous tungsten carbide scrap exporters are concerned about an imminent surge in domestic supply that the U.S. market is currently ill-equipped to absorb, risking market distortions and pricing volatility.
The anticipation of a domestic glut has led to expectations that tungsten carbide scrap prices will face further downward pressure. Market participants remain cautious and largely adopt a wait-and-see stance as enforcement mechanisms for the export restrictions remain somewhat unclear. In the week leading up to the rule’s enforcement, only a handful of exporters engaged in modest spot purchases, generally under 10,000 pounds, to fulfill pre-existing contracts while minimizing exposure to the new regulatory environment.
Price Trends and Processing Capacity Constraints
As of July 31, prices for key tungsten products including tungsten carbide blades and round bars had fallen to their lowest in 2026, ranging between $28 and $34 per pound, a monthly decline of roughly 12 to 13 percent. This depreciation largely reflects an adequate existing inventory held by major processors, coupled with processing plants operating near full capacity. The limited scope for procurement further dampens price support as buyers await clearer signals on the regulatory landscape.
Notably, the new measures stop short of instituting an outright export ban. Companies retain the option to apply for export waivers or exemptions, particularly when tungsten scrap undergoes overseas processing and refining before being re-imported to the U.S. As a result, the policy is widely viewed in the industry as a strategic export control mechanism rather than a total trade embargo. Provisions are expected to remain flexible enough to ensure critical domestic defense needs are met without severe disruption.
Strategic and Defense Industry Considerations
According to Argus Tungsten Analytics’ 2025 data, roughly 10% of global tungsten consumption stems from the defense sector, underscoring the metal’s strategic importance. Meanwhile, the automotive industry continues to dominate global tungsten demand due to its use in manufacturing cutting tools and wear-resistant materials. Supporting this, the U.S. Defense Logistics Agency (DLA) issued a request for information (RFI) on July 27 regarding the potential procurement of up to 200 metric tons of hard tungsten scrap. The RFI functions primarily as a market assessment tool and does not yet constitute a formal procurement tender.
Joseph Miller, a senior executive with exploration and critical minerals development company Mission Critical Metals, emphasized that the government’s maneuver is intended to catalyze growth in domestic tungsten processing capabilities. However, the timeline for establishing new capacity is measured in years rather than months. In the immediate term, the industry expects continued reliance on export licenses or waivers, while incumbent processors may gradually expand existing facilities rather than new entrants constructing large-scale operations overnight.
Broader Context and Market Outlook
This regulatory shift forms part of a broader U.S. policy trend targeting supply chain resilience and reduced dependence on foreign sources for strategic minerals. Tungsten, known for its hardness, high melting point, and critical uses in military hardware and industrial tooling, is recognized along with lithium, cobalt, and rare earth elements as essential to national security and technological competitiveness. These recent measures highlight the government’s intent to keep tungsten raw materials within national boundaries, stimulating domestic value-addition through processing and manufacturing.
Nonetheless, the transition poses substantial short-term challenges to industry stakeholders. Market liquidity may tighten as supply chain adjustments unfold, and price volatility is likely, influenced by both regulatory interpretations and evolving global demand dynamics. Companies trading in tungsten scrap must remain agile and responsive to mitigate risks amid shifting policy landscapes.
