From artillery shells to missile guidance systems, critical metals are the backbone of defense production, as covered in the first part of this series.
Booming defense industries strain supply, even as the US-aligned Western world has sought to shift its sourcing away from China and Russia.
The impact of war economy on defense-critical metals and global supply chains
According to the Department of Defense, US production of 155mm artillery projectiles using metals like tellurium and chromium has increased by 178% since 2022, rising from 14,400 to 40,000 units monthly to meet battlefield demands.
Fastmarkets’ assessed price for tellurium 99.9-99.99% Te min, in-whs Rotterdam was $100-132 per kg on Wednesday February 26,2025, compared with $65-79 per kg on February 25, 2022, following the Russian invasion of Ukraine, representing an increase of 54-67%. But the significant price rise is also attributed to China’s introduction of export controls on those metals and some of their related products in early February 2025.
Fastmarkets’ assessed price for tellurium 99.9-99.99% Te min, in-whs Rotterdam was $100-130 per kg on Wednesday March 5, 2025, compared with $65-79 per kg on February 25, 2022, following the Russian invasion of Ukraine, representing an increase of 53-65%. But the significant price rise is also attributed to China’s introduction of export controls on those metals and some of their related products in early February 2025.
In a February 2024 press release, the UK announced that it would spend £245 million ($310 million) over the following year to procure and strengthen supply chains for artillery ammunition — containing tungsten for specialized projectiles — to boost Ukraine’s reserves. The UK has committed almost £12 billion in economic, humanitarian and military aid since 2022, and has delivered more than 1,300 Brimstone anti-tank missiles to Ukraine containing metals like chromium and germanium for infrared sensors.
More recently, UK Prime Minister Keir Starmer announced on Tuesday February 25, “In an ever more dangerous world, increasing the resilience of our country so we can protect the British people, resist future shocks and bolster British interests, is vital.”
The announcement detailed plans to increase defense spending to 2.5% of the country’s gross domestic product (GDP) from April 2027, with an ambition to reach 3% in the next parliament, representing “the biggest sustained increase in defense spending since the Cold War,” according to the Prime Minister’s Office.
Fastmarkets’ assessed price for chromium alumino-thermic 99% min, in-whs Rotterdam was $12,000-13,150 per tonne on February 25, 2022, following the Russian invasion of Ukraine. It soared by 49-75% to $17,900-23,050 per tonne on April 8, 2022, having already previously jumped due to restocking triggered by Russia-Ukraine tensions. The price was most recently assessed at $9,250-11,500 per tonne on Friday February 28, 2025.
Prior to the war, Russia was one of Europe’s primary sources of chromium, according to a 2022 Joint Research Centre report of the European Commission. Russia ranked as the third largest source for EU chromium imports, with the European steel and defense sectors heavily reliant on these supplies.
“Nobody wants Russian origin for every metal, it’s tough to sell Russian origin,” a European trader told Fastmarkets. “In the UK you can’t touch it, and if you’re a public company, they take the position not to use Russian material.”
Meanwhile, Germany has delivered 422,000 rounds of 155mm ammunition containing graphite and tantalum, and 282,000 rounds for self-propelled anti-aircraft guns, while committing over €28 billion in military assistance since February 2022, according to the Press and Information Office of the Federal Government of Germany on February 17, 2025.
The conflict that erupted in Gaza on October 7, 2023, has similarly driven massive weapons consumption. According to a Brown University Costs of War report published in October 2024, the US delivered significant quantities of munitions to Israel between October 2023 and June 2024.
The report indicates that US weapons deliveries to Israel since October 7, 2023, included 57,000 155mm artillery shells, 36,000 rounds of cannon ammunition, 20,000 M4A1 rifles and 13,981 anti-tank missiles containing aluminum and copper used in warhead design.
These figures from both conflicts underscore the scale of material consumption in high-intensity conventional warfare, driving global demand for defense-critical metals.
Tungsten dilemma: more sourced from China as Russian supplies vanish
Tungsten is widely used in defense applications, including armor-piercing missiles and armor, thanks to its density and high melting point.
China, Vietnam and Russia are the top three tungsten producing and exporting countries globally, according to Nasdaq.
China is the largest tungsten producer in the world, accounting for 83% of global output in 2024, according to the latest US Geological Survey (USGS) data.
The latest Global Trade Tracker (GTT) data shows that from 2019 to 2021, EU countries imported 4,776 tonnes of ferro-tungsten from Russia, about 38% of the total worldwide. China accounted for 32.4% of total imports during the same period.
Russia was a major exporter of ferro-tungsten into Europe. But with ferro-tungsten flows from Black Sea ports disrupted after Russia’s invasion of Ukraine in 2022, European consumers turned increasingly to China, according to Emre Uzun, Fastmarkets steel and ferro-alloy analyst.
GTT data also shows that the EU imported a total of 3,581 tonnes of ferro-tungsten in the year to November 2024, and China accounted for about 60% of Europe’s ferro-tungsten intake in 2024, compensating for the loss of Russian supply, which totaled to only 3 tonnes that year.
“Russia’s invasion of Ukraine in 2022 initially pushed tungsten prices higher in Europe, with ferro-tungsten flows from Black Sea ports disrupted,” Uzun said. “Despite Russia not being a top producer, it was a major exporter of ferro-tungsten into Europe; once these trade flows largely diminished, European consumers turned increasingly to China.”
In the immediate aftermath of Russia’s invasion of Ukraine, for example, Fastmarkets’ twice weekly price assessment for ferro-tungsten basis 75% W, in-whs dup Rotterdam had a major rally, peaking for 2022 at $50-53 per kg W in March, up 37% from $36.50-38.80 per kg W at the beginning of that year.
Since then, prices have fluctuated, dipping back to pre-invasion levels during 2023 and 2024, but have had something of a rally in recent weeks, standing at $45-46 per kg W as of February 26.
Meanwhile, ammonium paratungstate (APT) prices have strengthened in recent weeks amid increased spot buying, and have held firm at this level partly as a reaction to the introduction of the export controls in China, further highlighting how closely linked global tungsten market dynamics are to developments in China.
Search for supply alternatives
The US and the EU are now looking for new alternatives to wean themselves off Chinese tungsten supply.
“We are waiting to see how the export control measures on critical minerals will affect the export business. I can’t judge if it will lead to a stronger push into Europe to compensate for US market loss or the opposite as exporting to Europe becomes more difficult,” a tungsten market participant in Europe told Fastmarkets.
New alternatives for tungsten supply outside China could include Almonty Industries’ Sangdong project in South Korea; the Bakuta tungsten mine in Kazakhstan; Vietnam’s Nui Phao tungsten mine; Panasqueira mine in Portugal; Australia’s EQ Resources or Canada’s Fireweed Metals.
Lewis Black, Almonty’s chief executive officer, said he has seen a clear upturn in demand from the defense sector in recent years.
“Up until recently Almonty was an industrial metals producer, but as the market has changed we’ve become a defense metals producer. We’re still mining tungsten, but our customers are using it differently now,” Black told Fastmarkets.
Almonty’s Sangdong project in South Korea will allocate 45% of its annual tungsten production to the US market, according to a company announcement. The company has also recently announced plans to domicile in the US.
The Nui Phao Operation mines and processes around 3.5 million tonnes of ore per year, containing tungsten, bismuth, fluorspar and copper, according to its 2023 annual report.
“China’s export control on critical minerals will, to some extent, force US and EU buyers to search for tungsten supply in the ex-China regions due to the intense geopolitical tensions and geopolitical uncertainties,” a third China-based tungsten trader said.
The spike in consumption of defense metals comes just as major supply vulnerabilities have once again come into the forefront of discussion. China introduced export controls in 2023 on germanium and gallium, which is nominally a defense material, but is more widely used in consumer technology, causing major concern in Western markets.
China’s export controls have subsequently been extended to cover antimony, graphite and some products related to tungsten, molybdenum, indium and tellurium.
Western governments and producers have moved to secure resilient supply chains, embarking on new projects and expanding existing ones in several regions.
Additionally, eyes are increasingly turning toward perceived politically non-aligned regions to offer alternative sources of supply. In the graphite market, for example, Fastmarkets has previously reported that African graphite supply is increasingly important to ease reliance on China.
Paul Lim in Singapore contributed to this story.
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