China's tungsten export controls have put Japan's manufacturing supply chains on alert. Japanese corporations are accelerating supply chain reorganization, moving to secure scrap tungsten from the United States and Europe and to expand investment in facilities for recycling materials and supplies.
According to Nikkei Asia on the 29th local time, Japan's imports of tungsten-related products from China in April fell 50% compared with this year's monthly average. Compared with the same period last year, the decline reached 63%. Based on China's General Administration of Customs statistics, exports of tungsten to Japan were completely halted from February to April this year. Nikkei Asia said this is the first time since related statistics began in 2015 that China's tungsten exports to Japan recorded "0."
Tungsten is a key raw material for industrial cutting tools used to machine automobile and aircraft components. It is a representative mineral used in the defense industry, including semiconductors, electronic equipment, shells, and missiles. China currently accounts for about 80% of global tungsten supply, leaving major manufacturing countries highly dependent on China.
Since the start of this year, China has tightened export controls on rare metals to exert political influence. In January, it stepped up export restrictions targeting Japan based on dual-use regulations, and in February it announced export control measures on five rare metals, including tungsten.
As a result, concerns over rising raw material prices and supply shortages are spreading to Japan's manufacturing sites. Mitsubishi Materials announced in April that it would raise prices for tungsten parts used in industrial cutting tools by up to more than threefold for orders from June. Sumitomo Electric Industries President Inoue Osamu said at a recent earnings briefing that "procurement of tungsten from China has been completely halted." Sumitomo Electric Industries had previously relied on China for about 30% of the materials and supplies used to produce cutting tools.
Cutting tool maker NS Tool postponed issuing its earnings outlook for the fiscal year ending March 2027 due to the surge in tungsten prices. The company said, "Over the past year, tungsten prices have risen about sevenfold." Another cutting tool maker, OSG, also said it is increasing procurement in Europe and elsewhere but that price hikes are inevitable due to higher costs.
Japanese corporations are responding by expanding tungsten recycling. The approach is to recover tungsten from used cutting tools and reuse it. Japan's imports of U.S.-origin scrap tungsten in March jumped about tenfold from a year earlier. Imports eased in April but remain above last year's levels. In the past, reliance on Chinese scrap tungsten was high, but recently there has been a move to diversify procurement to the United States, Europe, Singapore, and elsewhere.
Investment in recycling facilities is also expanding. Mitsubishi Materials plans to invest about 10 billion yen (944.35 billion won) to expand tungsten recycling facilities in Japan and Europe. It will increase the production capacity of a European company acquired in 2024 by 40% and double the processing capacity of its Akita Prefecture facilities in Japan by 2028–2029.
Sumitomo Electric Industries also plans to invest 15.9 billion yen (1.5015165 trillion won) to build a new recycling plant in Japan and increase its tungsten supply capacity by about 50%. The company is targeting the first half of the 2028 fiscal year to begin operations.