MethodologyContact usLogin
Several companies that previously didn’t produce gallium entered the market in 2023. One – Guizhou Qiya Group, a major aluminum producer specializing in alumina production – announced in late October that it had successfully produced qualified gallium and planned to further expand production in 2024. Additionally, top gallium producers have plans for increased production, Fastmarkets heard.
Estimates of the additional production capacity for 2024 vary among market participants. Some anticipate an increase of 200 to 300 tonnes.
“Top producers have been accumulating a large inventory this year and plan for significant expansions next year, likely around 200 tonnes, which is substantial considering last year’s total capacity was just over 600 tonnes,” a Chinese trader said.
Others in the market suggest that the actual increase in production might be around 120 tonnes.
“While estimates mention 200 to 300 tonnes, producers do consider existing capacities and order volumes, so the actual increase might be between 100 to 200 tonnes,” another Chinese trader said.
“The supply side will increase next year because many of China’s alumina enterprises have a certain foundation for gallium production. At least 12 tonnes of gallium capacity per month will be added,” a Chinese producer said.
The existing gallium supply primarily comes from by-products of bauxite processing and zinc processing residues.
The extraction of gallium during the production of aluminium has a cost advantage compared with other methods, and a significant portion of the world’s high-grade gallium-containing bauxite is concentrated in China. With China being a major participant in the aluminium industry, aluminium companies can find it more convenient to start or expand gallium production.
Though the forecasts for additional production capacity differ, the consensus among domestic market participants is that there will be a more severe oversupply in the market in 2024.
According to the US Geological Survey (USGS) data from January 2023, China’s gallium production capacity reached approximately 750 tonnes in 2022. Forecasts from market participants indicate that the estimated additional production capacity will be close to a quarter of the total domestic capacity in 2022.
China’s new energy, LED, semiconductor and magnetic materials industries are the major downstream consumers of gallium. Among these, the semiconductor industry is presently the largest consumer.
Despite the domestic market having a certain consumption capability for gallium, doubts exist among market participants regarding whether the actual downstream demand can absorb the increased production capacity, especially in the current unclear situation regarding gallium exports.
“The demand from the magnetic materials industry might increase next year, but the sector dealing with electronic durables hasn’t been performing well due to economic conditions. Military applications might hold potential, but they constitute only a small fraction of downstream consumption, making it difficult to predict for next year,” a Chinese buyer said.
As for whether gallium exports can return to previous levels in the new year, market participants indicate it will depend on policies. But there are indications that the control over gallium is stricter than that over germanium, evident in stricter audits and longer actual export processing times for the metal. Gallium’s export processing time might be around two weeks longer than that of germanium, Fastmarkets heard.
On July 3, China announced the implementation of export control policies for gallium and germanium starting from August 1, explicitly requiring relevant enterprises to provide proof of the final use for export items.
Since the policy implementation, gallium exports in August and September dropped to zero, only resuming in October.
According to the latest customs data, China exported 1,530 kilograms of gallium in November, significantly higher than the 250 kilograms exported in October, but still considerably less compared with the same period last year.
From January to November 2022, China exported a total of 66.65 tonnes of wrought gallium. In comparison, from January to November 2023, China exported a total of 24.34 tonnes of wrought gallium, marking a significant 63.48% decrease. Undoubtedly, the impact of the country’s export control policies has been substantial.
Since their implementation on August 1, China’s gallium prices have remained volatile and fluctuated significantly.
Fastmarkets’ weekly price assessment for gallium 99.99% Ga min, in-whs China was 2,000-2,070 yuan [$280-290] per kg on December 22, up from 1,960-2,100 on December 13, and up 19.35% from the 1,680-1,730 yuan per kg on on June 30, just before China’s export controls were announced.
If gallium exports fail to return to normal levels, the domestic market might experience an exacerbated oversupply situation, while overseas markets could face severe supply shortages, sources told Fastmarkets.
“In the mid-to-long term, the export situation doesn’t appear optimistic, and there shouldn’t be expectations for improvement. The overseas gap in gallium will be significant, as its applications are vast, and extraction and recovery are both challenging,” a Chinese exporter said.
According to the USGS data, global confirmed gallium metal reserves stood at 279,300 tonnes in 2022, with China’s gallium metal reserves at 190,000 tonnes, accounting for approximately 68%. As a major producer of gallium, China’s gallium production constitutes over 90% of global output.