In 2026, Japan’s two giants – Kanto Denka and Chuo Glass – will permanently cease production of tungsten hexafluoride on July 1, accounting for 25%-30% of the world’s total production capacity. Among them, ultra-high purity products (6N and above) have a market share of as high as 90%.
At the same time, the supply chain of high-end tungsten-based cutting tools and tungsten alloy parts for leading Japanese manufacturers such as Sumitomo Electric and Mitsubishi Materials is almost broken. This gap is global and no one can fill it in the short term.
About 80% of the world’s tungsten reserves and 79% of its refining capacity are concentrated in China, and the entire industry chain is independently controllable.
For domestic and foreign trade practitioners, this means that a huge, compliant, and highly profitable alternative order window has opened.
Let’s take a look at which businesses you can take on and which ones you can’t touch.
What is the most profitable?
The first echelon is carbide tungsten-based cutting tools, which is the track with the highest certainty.
The global market share of high-end cutting tools from Japanese companies such as Sumitomo and Nisshin Tools is about 15%-20%. After the shutdown, the gap in high-end precision machining tools is about 10%.
Precision manufacturing companies in Europe and North America are already frantically looking for alternative suppliers. In the first quarter of 2026, Tiangong International’s carbide cutting tool business revenue has increased by more than 300% year-on-year, and its customer retention rate has exceeded 90%.
Its profit margins are considerable, with foreign trade gross profit margins generally ranging from 35% to 55%, and the gross profit margins of some special tools exceeding 70%.
Customers are very willing to switch and there are almost no barriers to implementation. What foreign traders need to do is to prepare samples and performance reports and quickly connect with overseas distributors and terminal manufacturers.
The second echelon is tungsten-copper functional materials and “replacing tungsten with molybdenum”.
Tungsten copper functional materials are mainly used for power high-voltage contacts and AI computing power optical module cooling bases. Order stability is extremely strong, with gross profit margins of 30%-45%.
Domestic companies such as Sirui New Materials have successfully transferred technology from the electric field to the optical communication field. In 2025, related overseas revenue will increase by 208% year-on-year, and orders continue to increase.
“Replacing molybdenum for tungsten high-speed steel” is the track with the lowest entry barrier for small and medium-sized foreign traders. By adding molybdenum elements to replace part of the tungsten, the cost can be reduced by more than 25%, and the gross profit margin can still reach 25%-40%.
Tiangong International and other leading companies have fully laid out this technology route. Giants such as TSMC and Samsung are facing supply chain shortages, and Chinese suppliers have become their inevitable choice.
Which road should you avoid?
High purity tungsten powder and tungsten hexafluoride.
Tungsten hexafluoride has the highest profit margin (gross profit margin 40%-60%), but it is a clearly prohibited category.
Electronic-grade ultra-high-purity tungsten hexafluoride and high-purity tungsten powder of more than 99.999% are clearly prohibited from export, and there is no exception application channel.
At present, there are no publicly announced large orders in the industry, and companies such as China Shipbuilding Industry Corporation have also publicly stated that they have not signed any new legally binding large substantive orders, so there is great uncertainty.
Overview of core traffic lights: Green lights (which can be freely exported in compliance with regulations) include civilian tungsten-based cutting tools, tungsten-containing civilian special steels, general lighting tungsten wires, civilian tungsten electrodes, and molybdenum replacement of tungsten alloys. They can be declared as ordinary industrial products.
Yellow lights (which need to apply for a dual-use item license) include ammonium paratungstate, tungsten oxide, tungsten carbide, industrial grade tungsten powder and other primary processed products, which must pass the end-user review of the commerce department and can only be exported after obtaining a license.
The red lights (clearly prohibited from export) are high-purity tungsten powder (≥99.999%) and electronic-grade ultra-high-purity tungsten hexafluoride. Once seized, they will face confiscation of goods and qualification penalties.
In 2026, tungsten-related products have been listed as key inspection categories by the customs.
The key to compliance is that you must not attempt to export contraband goods by splitting orders, falsely reporting product names, etc.
The correct approach is: before receiving an order, first verify the product’s customs code and compare it with the latest dual-use item catalog in 2026; if the product belongs to the “green light” category, prepare a contract, invoice, and packing list, and truthfully declare the proportion of tungsten in the ingredients; if it belongs to the “yellow light” category, be sure to submit an application to the Ministry of Commerce in advance and complete overseas end-user background checks.
Summary: The break in the Japanese tungsten supply chain is a foregone conclusion, and the window for global replacement orders is quickly opening.
The best choice for foreign traders is to give priority to the cemented carbide tool track and exchange stable supply capacity for high profits; secondly choose tungsten-copper materials and molybdenum-replacement tungsten solutions to obtain small and medium-sized customers with cost-effectiveness.
Remember, exchanging orders for compliance is more important than anything else.
