Gallium Prices

Gallium Price Forecast

As the global economy becomes increasingly dependent on advanced technology, the demand for gallium, a critical component in modern electronics, continues to soar. Already this year, gallium prices have surged by +19.46%, following a 17.95% increase last year. This rapid price appreciation is fueled by several key factors, including rising demand from the semiconductor, telecommunications, and renewable energy sectors.

Gallium is essential for numerous high-tech applications, from the gallium arsenide chipsets used in 5G base stations to the highly efficient gallium nitride (GaN) components found in everything from military radar to laser technology and satellites. This makes it one of 35 elements the US government, alongside Europe, calls a national security concern.

However, gallium’s strategic importance goes far beyond telecommunications. The metal’s critical role in renewable energy sectors also drives up demand. For instance, thin-film solar panels rely heavily on gallium for their high efficiency. Europe alone is projected to consume seven to 26 times more gallium by 2030 compared to current levels, according to the Fraunhofer Institute.

Adding fuel to the fire is the ongoing supply crunch. China, which controls approximately 95% of the world’s gallium production, has tightened its grip on the market. This dominance took decades to achieve, and while the West scrambles to reduce dependency on Chinese supply chains, it faces the stark reality that creating sustainable alternatives will take a generation. The export ban imposed by China in August 2023, restricting gallium exports to the US, EU, and Japan, has exacerbated the situation, pushing gallium prices up sharply as Western companies scramble to secure this critical metal.

Consider Austria, a relatively small country with a population of just 9 million. The Austrian Federal Ministry of Agriculture, Regions, and Tourism estimates that Austria’s planned renewable energy projects will require 4.5 times the current global gallium production, an astounding statistic that underscores the scale of the impending gallium shortfall.

Meanwhile, China is not only limiting exports but also ramping up domestic consumption, particularly as its tech giant Huawei aggressively pursues leadership in gallium-based technologies. Huawei holds over 2,000 gallium-related patents, positioning itself to dominate the global market for gallium-integrated semiconductors for years to come.

The disparity in human capital further complicates the West’s efforts to challenge China’s dominance. While China graduates 200 metallurgists a week, the US produces 200 a year. Over 400,000 people are employed in China’s rare earths and technology metals industries, compared to a mere 400 in the US. Developing the necessary expertise, infrastructure, and supply chains outside of China will take at least a decade, likely longer.

In the meantime, the West remains dependent on whatever gallium China is willing to export after satisfying its domestic needs. The recent export ban serves as a clear reminder of China’s strategic leverage, and with gallium’s role in both national security and economic development, further restrictions or price hikes seem inevitable.

With demand rising across critical industries, from telecommunications to green energy, and supply remaining constrained for the foreseeable future, gallium prices are expected to remain under pressure. Analysts forecast that gallium’s price trajectory will continue its upward climb in the medium term, driven by its indispensability in high-tech sectors and ongoing supply shortages.