Cost of gallium goes up after Chinese export restrictions land

Measures needed to protect 'national interest,' says Beijing. Rubbish, it's retaliation, scoff critics

The price of gallium is said to have hit a 10-month high following export restrictions from China, which kicked in at the beginning of August in response to Western sanctions on sales of advanced technology to the country.

Beijing announced back in early July that it was imposing export controls on gallium and germanium, plus many compounds containing these metals that are used in semiconductors and other electronic components.

China is the largest global source for these materials, and since August 1, anyone wishing to export them has to apply to the Chinese Ministry of Commerce and obtain a license to do so.

The price of gallium in particular has risen by more than 50 percent since Beijing announced the restrictions, hitting $400 per kilogram on August 9, the highest since mid-October last year, according to Bloomberg, quoting data from price reporting agency Fastmarkets.

However, exporters were only able to file an application for a license from August 1, the same date the restrictions came into effect, Reuters reported, citing four traders as sources.

China's Ministry of Commerce said it had received some applications for export licenses covering gallium and germanium products, and it would review those applications in accordance with relevant laws and regulations.

It is understood that it may take up to 45 days for licenses to be issued once an application is received by the Ministry of Commerce, meaning there could be a stall in the international supply pipeline while traders await permission to resume shipments.

In the meantime, demand outside of China may have to be met from existing stockpiles, which could last for two to three months - a hiatus will likely lead to a growing surplus inside China.

Andrew Buss, IDC Senior Research Director for Europe, told us at the time the restrictions were announced that one reason for them could be to secure stockpiles of key resources such as gallium for future use by China's own industries.

"There is no major global shortage of gallium or germanium, and both are quite widely produced in a multitude of countries and regions, so there is unlikely to be a major external impact of this outside China, but it could well be a strategy to ensure China has enough internal supplies for its own growth ambitions for semiconductor or technology manufacturing," he said.

Beijing also said the measures were necessary "in order to safeguard national security and interests." However, they are being widely viewed as retaliation for the blocks on exports to China of technology for AI processing and manufacturing advanced semiconductors by the US and other countries.

The Japan Times said the export restrictions might also be aimed at the US defense industry as gallium nitride (GaN) is used in systems including advanced radar for military aircraft and warships.

As we reported previously, China is understood to be the source of about 60 percent of the world's germanium, with the rest coming from Canada, Finland, Russia, and the United States, while at least 80 percent of the world's supply of gallium is said to come from the country.

One Chinese official also warned last month that these restrictions on materials for semiconductors could be just the beginning, leading to fears that Beijing may be planning a clampdown on other key elements for which China is a major source. ®

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