1.What is Happening Right Now?
It is the first week of January 2026. The world for buying metals just changed completely. We can call this the "Resource Iron Curtain."
For the last twenty years, we could buy metals like Tungsten or Cobalt from anywhere. That era is over. Now, we have two separate markets. One market is in China, and the other is in the West. They have different prices and different rules.
Here is what the research shows is happening this week:
● Tungsten: The price is exploding. China controls about 82% of the supply. They just cut the amount they will sell to the world. At the same time, the United States started charging a 25% tax (tariff) on Chinese tungsten on January 1st.
● Cobalt: The situation in the Congo (DRC) is confusing but critical. They put a limit on how much they will export. They extended the deadline slightly to help trucks get through the border, but the total amount allowed for 2026 is still very low. Prices are jumping up because of this.
● High-Speed Steel (HSS): This is the steel used to make cutting tools. Because the ingredients (Tungsten and Cobalt) are expensive, steel prices are rising. But factories in China are getting busier again, so they are buying more steel. This supports the higher prices.
2.Tungsten: A Tale of Two Markets
I looked closely at the Tungsten market this week. It is arguably the most important metal for making hard tools.
The Chinese Side
China released its new list of companies allowed to export Tungsten on January 2nd. The list is short. Only 15 companies can sell it abroad.1
I checked the prices in China. A ton of "Black Tungsten Concentrate" now costs over 356,000 RMB.2 This is a record high. Why is it so expensive? I found that environmental inspectors are visiting mines in Jiangxi province. They are forcing mines to close for repairs. So, there is simply less rock coming out of the ground.
The Western Side
In Europe and America, buyers are panicking. The price for APT (a form of tungsten) in Rotterdam has hit $850 to $1,000.3 This is much higher than in China.
Why the difference? It is because of the new US taxes. On New Year's Day, the US government started a 25% tariff on Chinese tungsten.4 American companies are trying to buy from other countries like Vietnam or Brazil. But there is not enough supply there. So, they have to pay a huge premium.
3. Cobalt: The Artificial Shortage
Cobalt is essential for making high-performance tools (like M35 steel). The market for Cobalt is crazy right now.
The Congo's Big Move
Most of the world's Cobalt comes from the Democratic Republic of Congo (DRC). The government there wants more money. So, they set a cap. They said they will only export 96,600 tonnes in 2026.5
Here is the problem. The world needs more than that. The brief calculations show at least 100,000 tonnes needed.
The "Fake" Relief
You might see news that the Congo extended their deadline to March 2026. Be careful with this news. They only did this because too many trucks were stuck at the border.6 They are just clearing the traffic jam. The limit for the whole year of 2026 has not changed.
Because of this limit, the price of Cobalt on the London Metal Exchange (LME) climbed above $53,000 this week.7
4. High-Speed Steel: Who Pays the Bill?
How does this affect the factories that make drill bits and milling cutters?
The Cost of Alloys
From the price lists of big European steelmakers like Erasteel, they charge an extra fee called an "alloy surcharge." For January 2026, this fee is around 1,919 Euros per ton.8 It dropped a tiny bit from December, but it is still extremely high historically.
If you buy M35 steel (which has Cobalt in it), you will pay much more than for standard M2 steel. The gap between these two prices is getting wider.
Demand is Coming Back
Prices are high, but are people buying? Yes.
The "PMI" data for December is a score that tells us if factories are busy. China's score was 50.1.10 Any score over 50 means growth. This is the first time in months it has been positive. It means factories are running, and they need tools.
5. What Should We Do? (Strategic Advice)
Based on all this research, here are some advices for the next few months.
1. Don't Wait for Prices to Drop.
The high prices are not a temporary spike. They are caused by government rules (quotas and tariffs). These rules are not going away soon. If you need material for Q2, buy it now.
2. Watch the "Spread".
If you can buy tools made in countries that are not affected by the US tariffs, you might save money. But be careful. The supply in those countries is very low.
3. Recycle Everything.
Scrap metal is now like gold. Old drill bits contain tungsten and cobalt. If you run a factory, do not throw them away. Sell them or trade them. The price of scrap tungsten has jumped 160% in the last year.11
For international tool importers, wholesalers, and distributors:
The market shift in early 2026 brings practical challenges, not just higher prices. What You Should Pay Attention To:
1.Cost Stability Matters More Than Spot Prices
In the current environment, chasing short-term price drops carries higher risk. Frequent policy changes, export controls, and raw material quotas mean that prices can rise suddenly and unpredictably.
A stable supply partner with transparent pricing logic is becoming more valuable than the lowest quote.
2.Lead Time and Origin Are Now Strategic Factors
Country of origin, production capacity, and material sourcing channels directly affect delivery reliability.
Some non-tariff regions may offer short-term cost advantages, but limited capacity and unstable supply can quickly offset those benefits.
3.Inventory Planning Needs a Longer Horizon
The traditional “buy when prices fall” strategy is less effective. Buyers are encouraged to plan procurement at least one quarter ahead and secure key SKUs early, especially for cobalt- and tungsten-based cutting tools.
Our Responsibility as a Manufacturer:
As a tool manufacturer and long-term supplier, we believe our role is not to amplify market panic, but to help our partners navigate uncertainty with clearer information and realistic planning.
Our focus in the coming months will be:
●Maintaining stable production schedules despite raw material volatility
●Optimizing material utilization, including higher recycling and yield control
●Communicating early with customers about cost pressure and lead time changes
●Avoiding speculative pricing, and instead offering explainable, data-based quotations
We understand that our customers are also under pressure from their own markets. Sustainable cooperation, in this environment, depends on trust, transparency, and shared risk awareness, not short-term price competition.
6. Summary: A New Normal for the Tool Industry
The market has changed. It is no longer solely about supply and demand, but increasingly entangled with politics and borders. A resource iron curtain has descended, making everything more expensive. January 2026 will be remembered as a watershed moment in the critical minerals market. This month witnessed the shattering of free trade ideals against the harsh realities of geopolitics, giving way to a new world defined by barriers, quotas, and strategic maneuvering. For every participant in the industrial chain, adapting to this new normal of “high costs, high volatility, and stringent regulation” is not only essential for survival but also the key to securing competitive advantage over the next decade.
The cutting tools market is entering a phase where geopolitics, regulation, and resource security matter as much as manufacturing capability.
For both buyers and suppliers, the key question is no longer
“How cheap can I buy?”
but
“How reliably can I secure supply over the next 12–24 months?”
Those who adapt early to this new reality will be better positioned when volatility becomes the norm rather than the exception.
Disclaimer: This report is compiled based on publicly available market information, industry news, and data fragments as of January 4, 2026. Market risks exist; investment requires caution.
Works cited
1.China names companies allowed to export critical metals in 2026-2027 - Investing.com, accessed January 4, 2026, https://www.investing.com/news/commodities-news/china-names-companies-allowed-to-export-critical-metals-in-20262027-93CH-4425149
2.Tungsten Prices Continue to Soar as Major Producers Raise Long-Term Contract Prices, Marking a Staggering 150% Surge This Year [SMM Comment] - Shanghai Metal Market, accessed January 4, 2026, https://www.metal.com/en/newscontent/103664822
3.European Tungsten Prices Racing Higher on Chinese Gains, Pre-Holiday Production Void Threatens Further Spike [SMM Analysis] - Shanghai Metal Market, accessed January 4, 2026, https://www.metal.com/en/newscontent/103669348
4.United States Finalizes Section 301 Tariff Increases on Imports from China, accessed January 4, 2026, https://www.whitecase.com/insight-alert/united-states-finalizes-section-301-tariff-increases-imports-china
5.DRC to replace cobalt export ban with quotas - Project Blue, accessed December 27, 2025, https://projectblue.com/blue/news-analysis/1319/drc-to-replace-cobalt-export-ban-with-quotas
6.The DRC decided to extend the 2025 cobalt export quota to Q1 2026., accessed January 4, 2026, https://www.metal.com/en/newscontent/103701184
7.Cobalt - Price - Chart - Historical Data - News - Trading Economics, accessed January 4, 2026, https://tradingeconomics.com/commodity/cobalt
8.Alloy surcharge | Legierungszuschlag.info, accessed January 4, 2026, https://legierungszuschlag.info/en/
9.Tiangong International Co Ltd Stock Price Today | HK: 0826 Live - Investing.com, accessed January 4, 2026, https://www.investing.com/equities/tiangong-international-co-ltd
10.Manufacturing rebounds in December, accessed January 4, 2026, https://www.ecns.cn/news/economy/2026-01-02/detail-iheymvap1611554.shtml
11.Tungsten Concentrate Prices Surges 7% in a Single Day – December 16, 2025, accessed December 27, 2025, https://www.ctia.com.cn/en/news/46639.html
Post time: Jan-05-2026