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Customs data reveals a significant development in China’s exports as reported no exports of germanium and gallium products in August. The abrupt halt in exports is attributed to newly imposed export controls on these crucial chipmaking metals.
Export Volume Plummets to Zero
In August, Beijing’s exports of wrought germanium products came to a complete standstill. In stark contrast to July’s figure of 8.63 metric tons. This drastic decline follows a surge in July when exports more than doubled from June. Thus driven by overseas buyers rushing to secure their supplies before the imposition of export restrictions.
Similarly, there were no exports of wrought gallium products in August. A notable shift from July’s 5.15 tons and a considerable drop from 7.67 tons in the same month in 2022.
Export Controls and Escalating Tensions
China’s move to curb exports of eight gallium and six germanium products, effective from August 1st. Marks the latest development in an escalating trade dispute with Washington. This dispute primarily revolves around access to essential materials used in the production of high-tech microchips.
Under the new regulations, exporters of germanium and gallium products are now required to obtain export licenses for items and technologies classified as dual-use, meaning they have both military and civilian applications.
Obtaining these permits is a lengthy process, taking approximately 45 working days, as stated by an anonymous Chinese germanium trader and a germanium producer, both cautious due to the sensitive nature of the matter. Consequently, they reported a complete cessation of exports last month while awaiting the necessary permits.
Impact on Market Prices on China Halts Germanium
China’s domestic market experienced the ripple effects of these export controls and diminished demand. Spot prices of gallium metal plummeted by 9% in August, reaching 1,655 yuan per kg on August 31st, as reported by Shanghai Metals Market (SMM).
In contrast, the spot price of germanium ingot increased by 1% during the same month, reaching 9,700 yuan per kg at the end of August, according to SMM data. This uptick was attributed to tightening supply in the market.
Export Statistics for 2023
To put this development into perspective, China’s exports of wrought germanium soared by 58%, totaling 36.45 metric tons in the first eight months of 2023. However, wrought gallium exports experienced a stark contrast, plummeting by 58% over the same period, with a total of 22.72 tons exported from January to August.
The abrupt halt in germanium and gallium exports underscores the far-reaching implications of China’s export restrictions on the global supply chain, particularly in the microchip manufacturing sector.
Disclaimer: Please note that this article serves solely for informational purposes and should not be construed as financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
