Western Companies Feel the Pinch of China’s Trade Restrictions
Strategic Minerals in Short Supply
China’s curbs on antimony exports, announced in August, have started to disrupt Western companies’ supply chains. German chemicals and consumer goods giant Henkel recently declared force majeure and suspended deliveries of four types of adhesives and lubricants widely used by automakers. The company blames Beijing’s restrictions, which have delayed the importation of raw materials.
A Global Supply Chain Crisis
Henkel’s move highlights the severe disruption caused by Beijing’s trade restrictions and the struggle of Western players to replace China-based supply chains. The price of antimony, a scarce but essential metal, has rallied nearly 230% this year to about $39,000 per metric ton in Rotterdam’s busy spot market. China is the world’s largest antimony producer and dominates the production of many strategic materials.
Alternative Sources Sought
In response to Beijing’s restrictions, Western players are urgently seeking alternative sources of strategic minerals. Miner Perpetua Resources is developing an antimony mine in Idaho with U.S. government funding. Meanwhile, some Western miners and processors have started to build up capacity. United States Antimony, the only North American processor of the metal, plans to lift output at its Montana smelter.
New Opportunities Emerge
China’s restrictions have created new opportunities for Western miners and processors. Northern Graphite, which produces natural flake graphite, has seen orders jump 50% since Beijing’s graphite curbs were announced in October 2023. ReElement Technologies, an arm of American Resources, has received offers from U.S. miners to supply zinc ore, which can be a source of germanium during processing.
Disrupted Markets and Rising Prices
China’s export squeeze has triggered a surge in prices for many strategic minerals. Gallium sold outside of China was 30% to 40% more expensive than in the People’s Republic in the first half of 2024 from a year before. The restrictions have also forced some weaker players out of the market in China.
Diversification is Key
For end-users, China’s restrictions underscore the importance of supply diversification. Automaker Stellantis emphasizes the need to de-risk supply chains by using different levers. As the global supply chain crisis continues to unfold, companies are being forced to rethink their strategies and find new ways to secure critical materials.
Leave a Reply