Speaking at the Jefferies Industrials Conference earlier on Wednesday, MSC Industrial executive Martina McIsaac warned of a tungsten supply shock rippling through the company's supply chain and continuing to drive up industrial tooling costs.
McIsaac told Steve Volkmann, an industrial analyst at Jefferies, that inflation affecting tungsten carbide inputs is "in the neighborhood of 500%" and said suppliers were still passing higher costs through the manufacturing chain.
Cutting tools represent about 15% of MSC's revenue, making tungsten a major source of pricing pressure for one of the largest industrial distributors of tools and supplies across North America used by factories and machine shops. Notably, Grainger and Fastenal are larger by revenue.
"Tungsten has been the biggest driver," McIsaac said. "It's not our whole business, but it's a chunk of business, and it's not behind us."
Volkmann asked McIsaac: "Okay. And you said that it wasn't over yet, but I believe tungsten prices have flattened out a bit."
McIsaac responded: "They have stabilized, but the ripples through the supply chain aren't over yet. So some suppliers, for example, depending on where they source their tungsten powder and how much they had on hand, the cadence of their increases is all different. So every supplier is behaving a little differently, but there's still a way to come. I think we said in the third quarter, we expected late ... our late fourth quarter, early first quarter, there would be another price increase."
MSC sells tungsten-carbide cutting tools used to machine metal parts across North America. McIsaac's comments offer one of the first examples we've found of how the severe tungsten shortage, driven by China's export restrictions and continued Western demand, is pressuring industrial customers. Prices have climbed above $3,000, according to a recent Cantor Fitzgerald note.
China's dominance of tungsten production has certainly exposed a major vulnerability in Western manufacturing and defense supply chains.
The latest Katusa Research note puts China's share of global tungsten mine production at roughly 79% last year, or 67,000 tons out of 85,000 tons worldwide. The US has had no commercial mine production since 2015.
Beijing's February 2025 export-licensing requirements intensified that dependence. Katusa cites a nearly 70% decline in Chinese exports of ammonium paratungstate, or APT, through the first 11 months of 2025.
Rotterdam APT prices jumped from around $390 per metric ton unit at the beginning of 2025 to roughly $3,400 this spring, according to Katusa Research.
Citing Financial Times reporting, Katusa said that Chinese traders have panic-hoarded carbide inserts, drill bits and worn tooling, sometimes bidding as much as five times normal market prices.
Christian Keller, Barclays' global head of economics research, co-authored a note on Tuesday warning that "China's quasi-monopolistic position provides it with significant geopolitical leverage."
The end result has been a mad dash across the West, from governments to importers, to secure tungsten supplies outside China ahead of any further tightening of Chinese supply. However, there is only one problem...
Companies that can bring supply online sooner could capture a crucial early market advantage, including Almonty as it ramps up tungsten production in South Korea.
Jefferies initiates critical mineral companies Almonty, Materion, USA Rare Earth and Neo Performance with Buy; the firms are expected to benefit from increased demand for supply outside of China.
— zerohedge (@zerohedge) September 2, 2026
Almonty (buy, PT $26.25)
Sees Almonty offering public exposure to Western tungsten…
Deliverable supplies of critical materials from outside China can command a higher premium, reinforcing our broader decoupling theme. Our view is to identify companies positioned to bring new supplies to market as governments and manufacturers rebuild supply chains on an ex-China basis.
.png?branch=production)
.png?branch=production)
