China imposes export curbs on gallium and germanium; permits required to proceed
China imposes export curbs on gallium and germanium; permits required to proceed
China’s Export Controls on Gallium and Germanium Products Take Effect, Impacting International Supply
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In a move that has stirred up the global market, China’s new export controls on gallium and germanium products came into effect on August 1st. As the world’s leading supplier of these two minor metals, used predominantly in the production of semiconductors, China has implemented these restrictions citing concerns for national security. Traders are now preparing for a potential drop in international supply throughout August and September as they navigate the process of obtaining newly required export permits.
According to China’s Ministry of Commerce, exporters of gallium and germanium products now need to apply for export licenses for dual-use items and technologies. These licenses cover items with both military and civil applications, reflecting the Chinese government’s focus on safeguarding its strategic interests. However, there is a timeframe for submitting applications, with exporters able to apply from August 1st onwards.
Many traders are still in the process of preparing the necessary documentation and anticipate filing their applications in the coming week. The Ministry of Commerce has not provided any immediate response or clarification regarding the number of licenses that will be issued or if there will be limitations on the quantity.
Trade analysts suggest that it typically takes around two months to obtain such export licenses. In the meantime, stockpiles of gallium and germanium outside China, which can sustain the market for approximately two to three months, will need to be utilized while traders await Beijing’s export permit approvals. This dynamic is expected to lead to a growing surplus of these metals within China.
The impact of these export restrictions is already being felt in the global market, with the prices for gallium and germanium ingots rising sharply. In Rotterdam, the offer price for gallium ingot jumped 43.4% to $370 per kilogram last week, compared to $258 per kilogram at the end of June. Similarly, the offer price for germanium ingot in Rotterdam increased by 9.1%, reaching $1,473 per kilogram last week, up from $1,350 per kilogram a month earlier, as reported by the China Nonferrous Metals Industry Association.
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Willis Thomas, a consultant at London-based consultancy CRU, predicts that these price increases will likely continue over the coming months before cooling down towards the end of the year. This projection is based on the expectation that China’s exports and overseas supply of gallium and germanium will improve over time.
Customs data reveals that Chinese exports of wrought germanium and germanium products in the first half of this year surged 75.5% compared to the previous year, totaling 27,825 kilograms. Conversely, exports of wrought gallium and gallium products declined by 53.5%, amounting to 17,565 kilograms.
China’s export controls on gallium and germanium products have created a ripple effect in the global market, impacting both supply and prices. Traders are now working to obtain the necessary export licenses, while stockpiles outside China provide temporary relief. As the situation unfolds, market observers anticipate a period of price surges before a gradual stabilization towards the end of the year when supply improves.
Although the presence of these export controls may cause some challenges in the short term, they ultimately reflect China’s efforts to protect its national security interests. In a rapidly evolving global landscape, these measures demonstrate the importance of secure and reliable supply chains for critical materials like gallium and germanium, which play a vital role in various technological applications, particularly the semiconductor industry.
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