China Ga prices set to rise further on renewed demand

Chinese gallium prices are on course to rise further in the near future thanks to renewed demand and tight availability, adding to steady gains in the past two weeks, market participants said.

Buyers in the downstream permanent magnet industry have increased their purchases this week to restock ahead of the 11-17 February lunar new year holiday. Some producers have raised offer prices to over 2,000 yuan/kg ($309/kg) or Yn2,100/kg ex-works today, while some others have suspended offering prices because of limited inventories.

China plans to further boost sales of new energy vehicles (NEVs) to reduce exhaust emissions and protect the environment, with NEVs targeted to make up around 25pc of the total new car sales by 2025 compared to less than 5pc in January-October 2020, according to a draft plan by the ministry of industry and information technology. The plan may also boost demand for permanent magnets and in turn support gallium feedstock demand.

Spot gallium supplies remain tight, as most producers are committed to supplying long-term consumers or hold limited inventories following a fall in run rates at most smelters before mid-July when prices neared production costs. Most producers have operated at low rates in the past year because of a shortage of bauxite feedstock supplies caused by environmental restrictions. Some producers planned to ramp up output when prices rose sharply in August, but a shortfall of bauxite supplies has prevented output from rising.

China's gallium output is estimated at around 300-320t in 2020, down from 330-350t in 2019, compared with the country's total capacity of around 650 t/yr.

Prices for 99.99pc grade gallium metal were assessed at Yn1,900-2,000/kg ($293-309/kg) ex-works yesterday, up by 11.43pc from the start of this month and nearly double the level a year earlier.

China gallium prices Yn/kg