In terms of both supply and demand China dominates the global tungsten market, with western countries occupying a relatively minor position.
China produces around 86% of the world’s tungsten products:
|Mine Production 2007 (source – USGS)|
With the exception of the re-opening of the Cantung mine in Canada, there have been only limited additions to mine production outside of China for a considerable time. This has been indicative of difficulties faced in financing new tungsten mines, declining grades of new projects, and increased development and operating costs.
In recent years the Chinese government has moved to regulate the supply of tungsten products to western countries. In particular, export tax rebates on tungsten products have been cancelled, a 15% export tax has been introduced on all primary tungsten products, the annual tungsten export quota has been reduced, investment in China's tungsten industry has been halted, and many small scale mines have been closed.
China also plays a large role in the demand for tungsten, with approximately 59% of all tungsten being consumed there. China is however believed to have become a net importer of tungsten in 2008.
Western countries have a genuine strategic supply concern given the dominance of China on the supply side.
The outlook for tungsten is largely linked to GDP growth. While US and European consumption of tungsten has remained fairly static at around 3% per annum for some years, the growth rates of economies such as China, India and other fast developing nations has driven the demand for tungsten up by around 10% per annum. As mine production has been largely static since 2004, a deficit in supply has been met by recycling and selling down of strategic stockpiles in the US and Russia. These stockpiles are either exhausted or carefully managed, and indeed in November 2008 Japan announced that it was increasing its own stockpile.
|World Consumption (source – USGS)|
|Tonnes (2004)||Tonnes (2007)||Percentage|