BEIJING/SINGAPORE (Reuters) – Prices of germanium, a strategic metal essential for chip production, hit a record high in China’s biggest producer on Wednesday, amid speculation about possible state purchases, industry sources said.
China supplies 60 percent of the world’s germanium, which is used in applications such as fiber optic cables, solar cells and infrared technology. It imposed controls on exports of germanium and gallium products in August last year.
Spot prices of germanium bars have risen by almost a third in the past month to a record high of 13,250 yuan ($1,826.48) per kilogram (kg) on Wednesday, data from information provider Shanghai Metals Market (SMM) showed.
Since export restrictions came into effect, prices have risen by 38%, contrary to expectations that increased supply on the domestic market would put pressure on local prices.
Several industry insiders, who asked not to be named because the information was confidential, said the rally was prompted by speculation that the National Food and Strategic Reserves Administration, China’s state agency for food storage, would buy up about 100 tons.
It is unclear how much the state stock manager paid, the sources said.
China’s Stockpile Storage Agency did not immediately respond to a request for comment.
“The market rumors created a more positive sentiment, which contributed to this price increase. However, we remain cautious as it is still too speculative and a downward correction may come even sooner,” said a Chinese germanium trader.
According to a Chinese germanium exporter, recent demand from both foreign and domestic users is also pushing up prices.
“We have recently received many inquiries from Japan and South Korea for germanium oxide,” said the source, who asked not to be named.
Customs data showed that China’s exports of germanium, both processed and unprocessed, fell 55% in the first five months of this year from the same period last year to 11.08 tonnes, while the value of shipments rose nearly 300%.
($1 = 7.2544 Chinese yuan)
(Reporting by the Beijing newsroom and Tony Munroe in Singapore; Editing by Miral Fahmy)
