New export figures for gallium and germanium are available: They show that trade in the two technology metals experienced major fluctuations in 2023. This was due to export controls imposed by China. Purchasing must continue to expect a challenging market environment in 2024.
In the summer of 2023, the Chinese Ministry of Commerce issued strict export regulations for a large number of raw materials, technologies and products or tightened some of the existing export regulations. These currently include the following Gallium- and Germanium products affected. China is the largest producer of the two technology metals: according to official data, China accounts for more than 90 per cent of global gallium production and around 80 per cent of germanium production. The metals are used in microchips, LEDs and solar panels. Germanium is also an important component of fibre optic cables.
Export controls have an impact on international trade
The licence requirement was announced on 3 July with reference to national security: the raw materials are so-called dual-use goods, i.e. those that can be used for both civilian and military purposes. The rules came into force on 1 August and companies were faced with challenges due to the long processing times for export licences, with exports of both metals falling to almost zero, as figures from the customs authorities show. Although China's Ministry of Commerce issued the first licences in September, exports did not pick up again until November.
Matthias Rüth, Managing Director of TRADIUM, takes stock: "We experienced a very turbulent year for gallium and germanium in 2023: the supply chains were almost completely disrupted for a short time. China has once again demonstrated its dominance in the raw materials market."
Challenges for purchasing
Against this backdrop, the Management consultancy Deloitte bottlenecks in the supply of the two technology metals for 2024 as well. Restricted or delayed exports of raw materials will meet rising demand. Demand for gallium for microchips could more than double in the coming years: from 38 tonnes in 2018 to up to 79 tonnes in 2040, according to the German Raw Materials Agency is forecast. Demand for germanium in the fibre optic cable application area is forecast to increase from 59 tonnes in 2018 to up to 246 tonnes in 2040.
However, processing companies can proactively prepare for possible deficits. One measure is to hold adequate stocks for several months. Matthias Rüth: "The risks of export restrictions and bureaucratic hurdles can be managed well by systematically increasing your own stocks of critical metals. This enables a reliable supply of raw materials even when just-in-time deliveries reach their limits. This procurement strategy is not very popular with companies that are usually driven by key figures. However, in view of the current situation on the raw materials markets and the predicted shortages, it can quickly pay off."
Gallium and germanium are not the only resources that the industry could lack in the coming months. Export restrictions are now also in place for other strategic raw materials. In addition to the battery material graphite, these also affect antimony, silver and tungsten. The Export of certain technologies for the extraction and processing of rare earths and the manufacture of permanent magnets was also made subject to conditions.
