China’s germanium, gallium ban could cost the US $3.4 billion
According to the USGS, gallium prices could increase by more than 150% and germanium prices by 26% in the event of a total ban.
A new report by Roskill states that the synthetic graphite market could be driven into a deficit as a consequence of booming demand from growth in the lithium-ion battery and downstream EV sectors worldwide, and the strict energy consumption control policy for high-energy consuming industries that Inner Mongolia has applied in response to China’s 14th Five-Year Plan.
The new controls have limited the production of synthetic graphite from existing producers as the supply of electricity to the region’s synthetic graphite graphitization plants decreased by 15-30% since April, according to Chinese industry research firm ICCSINO. The situation improved in May and June, but supply tightened again in July, with utilization rates falling by 10% in Ulanqab.
Besides potentially affecting the possibility of new projects getting government approval, Roskill says that this situation has led to a 70% increase in the price of active anode material (AAM) based on synthetic graphite.
The supply of electricity to Inner Mongolia’s synthetic graphite graphitization plants decreased by 15-30% since April
“As synthetic graphite is manufactured specifically for the end-user, a reduction in planned output effectively represents a deficit in the supply/demand balance,” the report states. “[This could lead to] even higher prices for synthetic graphite and AAM.”
The market analyst says that Inner Mongolia is an important Chinese production hub for synthetic graphite due to its relatively low electricity unit price. Large amounts of electricity are needed to fuel the graphitization process, which is a major part of synthetic graphite manufacture.
The graphitization process requires temperatures above 2,300 degrees Celsius and consumes large amounts of energy at more than 12,000 kWh/t.
Given its privileged position when it comes to energy prices, Inner Mongolia hosts approximately 46% of China’s graphitization capacity.
However, if things are to continue down the same road, Roskill suggests that in the short term, new capacity could be brought online in other provinces, such as Sichuan, Shanxi or Yunnan, to substitute for lower supply in Inner Mongolia.
In the longer term, new project capacity will need to be set up in China, and potentially in other regions, to meet the large forecast growth in demand.
