China’s gallium exports in limbo after start of controls

CHINA’S push to control its exports of gallium has sent prices for the metal used in semiconductors to a 10-month high, as suppliers await official approvals to ship overseas.

Chinese producers of the niche metal will need permission to ship abroad under rules effective from Aug 1. While some exporters have filed for approval, they expect the process could take several weeks, according to people with knowledge of the issue who declined to be named as the information is not public.

That has left the global market facing a crimp on supply that could stretch beyond August – even if the exporters ultimately get approval. Gallium’s price has surged more than 50 per cent since China unveiled its restrictions in early July, according to Fastmarkets data, pointing to a tighter market.

“Most of the major consumers abroad have stockpiles of material, which can sustain their production through this short-term supply crunch,” said Dan Manaig, director of global sales and strategy at Chinese refinery Wuhan Tuocai Technology Co.

However, any rejections among the first wave of export applications “would create more real supply anxiety and the market would react with price increases”, he said.

China unveiled curbs on gallium and another metal, germanium, last month. The restrictions – seen as part of Beijing’s tit-for-tat battle with the West over technology – spooked global buyers and prompted reactions from senior US officials. China refines about 94 per cent of the world’s gallium, according to EU figures.

Gallium traded at US$400 a kilogram on Aug 9, the highest since mid-October last year, the Fastmarkets data showed.

Wuhan Tuocai’s exports of gallium and germanium have halted, Manaig said, and he expects approval for new shipments to take six to eight weeks. The permits will be valid for up to six months, he added.

The curbs have been viewed as Beijing using its dominant role in the metals to hit back at US and European efforts to stymie China’s semiconductor industry. Western governments are trying to reduce their reliance on the Asian giant for a swathe of critical minerals. Gallium is also used in Navy radar on vessels for air and missile defence and by the Army and Marines in ground-based radar for detecting rockets, artillery, mortars, cruise missiles, and aerial drones.

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China exported about 80 to 90 tonnes of gallium metal and 50 tonnes of gallium oxide a year before the curbs, compared with a domestic production of about 700 tonnes of gallium metal, according to estimates from Shanghai Metals Market.