Return of the Raw Material Shock: Lithium Up 80%, Tungsten Up 130% Reveals the True Nature of "Industrial Inflation"

The global economy is once again facing a wave of rising raw material costs.

According to an analysis by the Bavarian Economic Association reported by a German regional newspaper, almost all major raw materials in the global market saw significant price increases in the first quarter of 2026. This time, the surge is not just about crude oil or natural gas. Precious metals, rare earths, and industrial metals—materials that underpin the manufacturing industry—are all skyrocketing.

The association's raw material price index rose by 14.3% in the first quarter, reaching 188.9 points. Compared to the same period last year, this is a 23.1% increase, nearing the record highs of 2021. Notably, precious metals rose by over 34%, rare earths by 29.3%, and industrial metals by 14.3%. Individually, lithium prices increased by over 80%, and tungsten by more than 130%.

This is not merely a temporary market fluctuation. These materials are deeply embedded in modern industry. Lithium is essential for electric vehicles and storage batteries, while tungsten is used in high-performance tools, AI-related semiconductors, and defense equipment. Rare earths are indispensable for motors, wind power, electronic components, magnets, and military technology. In other words, the price hikes are not just about resources extracted from "some distant country's mines," but materials that support the cars, smartphones, power infrastructure, data centers, and security we use.

It's Not Just "Oil" Inflation

In recent years, when energy prices rise, many people think of crude oil or natural gas. Indeed, geopolitical tensions from the Iran war are strongly perceived as factors driving up energy costs. If the Middle East situation destabilizes, there is a potential chain reaction of rising crude oil transportation, maritime traffic, insurance premiums, and logistics costs.

However, this time, the more serious issue is that the price increases are not limited to energy. For the German industry, rising electricity and fuel costs are already burdensome, but they are compounded by the rising costs of metal materials. For manufacturers, this is a double or even triple cost pressure.

Automakers face rising battery material costs. Machinery manufacturers are wary of the costs of steel, aluminum, copper, and special metals. Electronics manufacturers are concerned about the supply uncertainty of semiconductors, magnets, and rare metals. In the defense and aerospace industries, securing tungsten and rare earths becomes a security issue.

The rise in raw material prices initially appears as increased procurement costs for companies. However, if companies can no longer absorb this burden, it will be passed on to product prices. Ultimately, it will ripple through to consumers' lives via cars, home appliances, smartphones, housing equipment, electricity bills, and logistics costs.

China Dependence Behind Rare Earth Price Surge

The price increase of rare earths is particularly noteworthy this time. Rare earth prices reportedly rose by 29.3% in the first quarter. The background includes the impact of export controls by the Chinese government.

Although rare earths are written as "rare earth," they are not so rare as to be nonexistent on Earth. The problem lies in the refining, separation, and processing stages rather than mining. These processes have a significant environmental impact, require technology and capital investment, and China has long established a dominant presence in this area. According to the International Energy Agency's analysis, China holds a very large share not only in rare earth mining but also in downstream processes like refining and magnet manufacturing.

Therefore, when China strengthens export controls, the global manufacturing industry reacts immediately. For companies in Europe, Japan, and the United States, rare earths are indispensable for EVs, wind power, robots, semiconductors, and defense equipment. The need to increase alternative procurement sources has been pointed out for some time, but supply chains cannot be changed overnight.

The recent price surge has highlighted the world's over-reliance on the premise of "cheap, stable, and readily available raw materials."

What the Sharp Rise in Lithium and Tungsten Prices Means

The over 80% increase in lithium prices cannot be overlooked by the automotive industry advancing electrification. Lithium-ion batteries are involved not only in EVs but also in home storage batteries, renewable energy adjustment, and backup power for data centers. If the materials supporting a decarbonized society soar in price, it could reflect on EV prices and battery costs.

On the other hand, the over 130% rise in tungsten prices has a more geopolitical significance. Tungsten is extremely hard and heat-resistant, making it used in tools, semiconductor manufacturing equipment, and defense-related parts. As demand for AI chips and military applications is recognized, the sharp rise in tungsten prices indicates that the "material scramble for advanced technology and security" is intensifying.

Until now, the raw material market has tended to focus on bulk commodities like iron ore and crude oil. However, currently, "strategic materials" that are smaller in quantity but of high industrial importance are gaining attention. The greater the price fluctuation range, the more limited the supply countries, and the more politically influenced the material, the higher the risk for companies.

Concerns About "Price Increases" and "Reducing Dependence on China" on Social Media

On social media, there are three main reactions to this news.

The first is concern about the cost of living. Hearing about the surge in raw material prices might seem distant to general consumers. However, on social media, perceptions like "Will cars and home appliances become more expensive again?" "Will it affect electricity bills and logistics costs?" and "Ultimately, consumers will end up paying" are prominent. Especially in Europe, the memory of the energy crisis and inflation is still fresh, and many see the raw material surge as a precursor to new price increases.

The second is dissatisfaction with industrial policy. Posts about rare earths and critical minerals include opinions like "Why has Europe depended so much on China?" "Isn't this the result of avoiding domestic production due to environmental regulations and profitability issues?" and "The reliance on free trade has come back to haunt us." Discussions on Reddit point out that Europe is lagging behind the US and China in securing critical minerals.

The third is a reaction from an investment perspective. With the rise in prices of precious metals, rare earths, and lithium-related materials, discussions like "Shouldn't we focus on mining stocks and resource-related stocks?" "Will gold and silver continue to rise?" and "However, markets like lithium that repeatedly surge and plummet are difficult" are also seen. While resource price increases mean higher costs for companies and consumers, they are also an easily themed area for investors.

However, many short-term speculations are present in social media reactions. The raw material market is greatly influenced by geopolitics, exchange rates, inventory, transportation, policy, and technological innovation. Making investment decisions based solely on price increases is dangerous. More important is discerning why prices are moving, which industries they will impact, and how fragile the supply chain is.

A Shift for Companies from "Cheapness" to "Securing"

Until now, many companies have chosen the cheapest procurement sources in globalization, kept inventories to a minimum, and built efficient supply chains. However, after the pandemic, the Ukraine war, US-China tensions, and the intensification of the Middle East situation, that premise is collapsing.

From now on, what matters is not just whether it is cheap, but "Can it be secured when needed?" "Is the political risk low?" "Are there multiple procurement sources?" "Can recycling or alternative materials be used?" For companies, raw material procurement is not just a purchasing department issue but a core management strategy.

For manufacturing countries like Germany and Japan, this issue is particularly serious. Countries without abundant resources have competed with processing technology and product competitiveness. However, if materials soar in price and supply becomes unstable, production plans will go awry no matter how much technological prowess they have. High-performance EVs cannot be made if there is a shortage of motor magnets. AI servers cannot be expanded if the supply of semiconductors and special metals is delayed.

The "Invisible Price Increase" That Also Affects Consumers

The rise in raw material prices does not immediately reflect in store prices. Companies can temporarily mitigate the impact with inventory and long-term contracts. However, if price increases persist, they will eventually be passed on to product prices.

For example, the price of home appliances goes up. Discounts on cars shrink. Repair parts become more expensive. The price of construction materials rises, inflating the costs of housing and infrastructure development. If logistics and energy prices rise, it indirectly affects food and daily necessities.

The troublesome aspect for consumers is that the rise in raw material prices manifests as an "invisible price increase." It affects not only the product price itself but also appears in forms like reduced capacity, simplified standard equipment, longer delivery times, and increased repair costs.

Is the Surge in Raw Material Prices Temporary or a Structural Change?

It is still necessary to determine whether the current price increase is temporary or a long-term structural change. If the Middle East situation calms down, some energy prices might decrease. If China's export controls are relaxed, tensions in the rare earth market might ease. If demand falls due to an economic slowdown, metal prices might adjust.

However, in the long term, demand for critical minerals is likely to increase. EVs, renewable energy, power grids, AI data centers, defense equipment, semiconductors, and robots all require a more diverse range of metals and minerals than before. As long as decarbonization and digitalization, along with security enhancements, progress simultaneously, competition over critical minerals will continue.

Governments around the world are also starting to take action. In Europe, securing domestic procurement, recycling, and alternative supply networks for critical raw materials are becoming issues. The G7 is also discussing the stable securing of critical minerals. However, it takes time to develop new mines and refining facilities. Environmental regulations, opposition from local residents, profitability, and a shortage of technicians are also barriers.

In other words, the surge in raw material prices is not just market news. It is a sign that the structure of the global economy is shifting from "cheap global procurement" to "securing stable supply even if expensive."

Points to Watch in the Future

The focus going forward is firstly on the Middle East situation and energy prices. If crude oil and natural gas rise further, costs will increase at every stage of extraction, refining, transportation, and manufacturing.

Next is the future of China's export regulations. If export controls on rare earths and critical minerals are strengthened, manufacturing industries in Europe and Japan will continue to face supply uncertainties.

The third point is how companies pass on prices. How much of the raw material cost can companies absorb, and from where will it be reflected in consumer prices, will change the spread of inflation.

The fourth point is alternative technologies and recycling. If progress is made in motors that do not use rare earths, sodium-ion batteries, and metal recovery from urban mines, it may be possible to somewhat mitigate supply risks.

Finally, attention should also be paid to overheating in the investment market. Rising resource prices easily generate expectations for related stocks, but the resource market repeatedly surges and plummets. Instead of jumping on topics popularized on social media, it is necessary to calmly assess supply structures, demand sustainability, and policy risks.

The rise in raw material prices is not a specialized issue happening in the back of factories. It is connected to smartphone prices, EV proliferation, renewable energy costs, AI expansion, defense enhancement, and our daily living expenses.

The news indicates that the world is once again facing the power dynamics between "countries with resources" and "countries that need resources." The era supported by cheap raw materials may be quietly coming to an end.

Source URL

Fehmarn24 "Fast alle Rohstoffe verteuern sich erheblich". Reporting on raw material price increases by the Bavarian Economic Association, including the rise in lithium, tungsten, and rare earths.
https://www.fehmarn24.de/wirtschaft/fast-alle-rohstoffe-verteuern-sich-erheblich-zr-94293599.html

dpa distributed article with the same content: WELT "vbw-Index: Fast alle Rohstoffe verteuern sich erheblich". Used to confirm vbw index at 188.9 points, a 23.1% increase year-on-year.
https://www.welt.de/regionales/bayern/article69faaf8ecd4a28c47001d354/vbw-index-fast-alle-rohstoffe-verteuern-sich-erheblich.html

dpa distributed article with the same content: ZEIT "vbw-Index: Fast alle Rohstoffe verteuern sich erheblich". Used to confirm figures such as over 34% for precious metals, 29.3% for rare earths, and 14.3% for industrial metals.
https://www.zeit.de/news/2026-05/06/vbw-index-fast-alle-rohstoffe-verteuern-sich-erheblich

vbw official: vbw Rohstoffpreisindex. Used to confirm an overview of the raw material price index, past data, and raw material price trends.
https://www.vbw-bayern.de/vbw/Themen-und-Services/Rohstoffe-Ressourcen/vbw-Rohstoffpreisindex.jsp

vbw official PDF: vbw Rohstoffpreisindex January 2026. Used to confirm raw material price increases at the beginning of 2026, index at 186.1 points, and increases in industrial metals, precious metals, and rare earths.
https://www.vbw-bayern.de/Redaktion/Frei-zugaengliche-Medien/Abteilungen-GS/Volkswirtschaft/2026/Downloads/01-vbw-Rohstoffpreisindex_Januar-2026.pdf

International Energy Agency: Rare Earth Elements Executive Summary. Used to confirm China's dominant share in rare earth mining, refining, and magnet manufacturing, and supply concentration risks.
https://www.iea.org/reports/rare-earth-elements/executive-summary

International Energy Agency: Global Critical Minerals Outlook 2025 Executive Summary. Used to confirm the background of refining concentration, supply chain risks, and mineral demand necessary for energy transition.
https://www.iea.org/reports/global-critical-minerals-outlook-2025/executive-summary

European Parliament: China's rare-earth export restrictions. Used to confirm the background of China's rare earth export restrictions and their impact on European industry.
https://www.europarl.europa.eu/RegData/etudes/