China's Rare Metal Export Controls Drive Record Prices Three Years On as Western Alternative Supply Remains Elusive
nashnova research
Nearly three years after China imposed export controls on gallium and germanium, offshore prices have surged to 9–10 times pre-control levels; China still supplies 98.9% of the world's primary gallium, and Western domestic alternatives remain far from operational — de-risking is still a promise, not a fact.
Three years in — how high have prices gone?
Gallium and germanium prices outside China have hit 9–10 times their pre-control levels, setting all-time records.
This means → the export controls have not been absorbed by alternative supply. The price signal points to a widening gap, not a closing one.
Consultancy Project Blue estimates China still accounts for 98.9% of global primary gallium and 68.6% of germanium supply in 2025 — Western progress toward reducing dependence has been minimal.
Demand is still climbing — what's driving it?
S&P Global projects global gallium demand will grow at roughly 12% per year from 2025 to 2030, starting from about 1,000 tonnes; germanium demand will grow at about 3.3% annually, starting from roughly 343 tonnes.
Three forces are pushing: AI compute buildout, fibre-optic network expansion, and wider adoption of infrared imaging.
In plain terms = demand is accelerating while supply stays locked in Chinese hands — the scissors are only opening wider.
Can substitute materials fill the gap?
In some semiconductor applications, gallium arsenide is being replaced by indium phosphide. In infrared optics, zinc selenide, zinc sulfide, silicon, and chalcogenide glass are drawing attention as germanium alternatives.
But substitution is not a simple swap. Edmund Optics SVP Jessica DeGroote Nelson: "There's no one-to-one replacement for germanium. Using other materials requires redesign — not impossible, but very difficult."
One optics firm cut its germanium use in half over roughly 18 months by switching materials, but at the cost of moving to Western suppliers and raising product prices — this reflects real substitution costs flowing downstream.
How are companies coping right now?
Stockpiling is the most common short-term response: some customers are buying germanium before product designs are even finalised, locking in supply for volume production.
Lattice Materials president Travis Wood: "We see no sign of supply easing in the near term. All the data says prices stay at least at current levels — and may keep climbing."
Lattice produces germanium crystals for fighter-jet and tank displays and has built recycling into its supply strategy. Belgium's Umicore is also partnering with DRC-based STL to boost germanium recovery rates.
Where does Western new capacity stand?
Greek firm METLEN has begun pilot-scale production, targeting 50 tonnes of gallium per year by 2028 — but says demand from potential customers already exceeds that target.
This means → even if the new capacity comes online on schedule, the supply-demand gap will persist. 50 tonnes is nowhere near enough to close the market shortfall.
Argus senior analyst Cristina Belda notes that infrared-optics makers serving defence and thermal-imaging systems have been hit hardest, and are accelerating moves toward diversified sourcing, recycling, and non-Chinese projects.
Can the West de-risk before 2028?
Demand still expanding + long adjustment cycles for substitute technologies + new capacity not yet at scale — under this triple pressure, effective de-risking by 2028 remains an open question, not a settled plan.
In plain terms = the West knows the problem, and money is flowing in, but the time lag between "knowing" and "capacity online" is exactly the window where China's control lever is most effective.
This reflects a deeper reality: in critical minerals, supply concentration is itself a weapon — and breaking it takes not months, but years.
市场有风险，内容仅供研究参考，不构成投资建议。