Chinese exports of two critical minerals plunge even as rare earths rebound

China's exports of critical minerals antimony and germanium have plummeted by 88% and 95% respectively since January, reaching near-record lows, amid an intensified crackdown on smuggling and transshipment by Chinese authorities. This sharp decline follows their inclusion on export control lists and a U.S. export ban, contrasting with a recent rebound in rare earth exports. Consequently, spot market prices for high-purity germanium have more than doubled and antimony prices have nearly quadrupled, signaling significant supply chain disruption and sustained pricing pressure for these key industrial inputs.

Analysis

China's exports of the critical minerals antimony and germanium have experienced a severe collapse, with volumes in June falling 88% and 95% respectively compared to January levels. This precipitous decline is a direct result of an intensified government crackdown on smuggling and transshipment, reportedly involving China's top spy agency, after both minerals were added to an export control list and banned for export to the U.S. Unlike the recent recovery seen in rare earth exports following a U.S.-China accord, the supply of antimony and germanium has constricted to near-record lows, indicating a more persistent enforcement action. The effectiveness of this crackdown is evidenced by the 90% collapse in antimony exports to Thailand, a suspected transshipment hub. The market impact has been substantial, with spot prices for high-purity germanium more than doubling since July 2023 and antimony prices nearly quadrupling from May 2023, signaling a significant and ongoing supply shock for industries reliant on these materials, including defense and telecommunications.

Key Decisions for Investors

• Investors should immediately review portfolio exposure to sectors dependent on antimony and germanium, such as solar, telecommunications, and defense, as sustained high input costs are likely to compress margins.
• Consider strategic investments in non-Chinese miners or in companies developing recycling technologies and substitute materials, as these are positioned to benefit from the structural supply chain disruption and elevated commodity prices.
• Closely monitor geopolitical developments between Washington and Beijing, as the precedent set by rare earths suggests a diplomatic agreement could rapidly normalize export flows and cause a sharp price correction for these minerals.
• The extreme price volatility and supply uncertainty present a strong case for caution; avoid establishing large, unhedged positions in downstream industries until there is greater clarity on the longevity of China's export enforcement.