Gallium Prices Surge as China Export Controls and 5G/Defense Demand Strain Supply

The gallium market in mid-2026 is defined by the collision of near-monopoly supply concentration with surging demand from next-generation electronics. The SMM industrial benchmark for 4N low-purity gallium stood at $288.82/kg as of July 1, 2026, up 4.2% from $277.15/kg at the June 1 benchmark, according to Rare Earth Mining data. This represents a more than 200% increase since the start of 2024 and extends the upward trend that began with China's August 2023 export controls.

China's dominance is extreme: approximately 98% of global primary low-purity gallium production, with total output reaching approximately 760 tonnes in 2024, up from 633 tonnes in 2023. The export control regime introduced in August 2023 required licensing for gallium exports, causing an immediate drop in outbound shipments. By December 2024, China escalated to a targeted ban on gallium exports to the United States, creating a formal split between Chinese domestic and ex-China supply chains. CSIS analysis notes that by early 2024, prices had largely decoupled into two distinct markets, with gallium sold outside China at nearly double the domestic price.

The Rotterdam price reached $687/kg in May 2025, an increase of over 150% over pre-control prices, according to CSIS tracking. The China FOB price sits between domestic and Rotterdam levels, capturing the export compliance premium. Anti-smuggling enforcement throughout 2025 has further tightened availability, closing grey-market channels that had partially offset earlier licensing friction.

Demand growth is accelerating across multiple high-tech sectors. GaN power electronics for 5G/6G base stations, EV charging infrastructure, and data center power supplies are the primary growth engine. China operated approximately 4.486 million 5G base stations by May 2025, up 235,000 in the first five months of 2025 alone, supporting strong GaN device demand. GaAs RF chips for smartphones and satellite communications, military radar systems, and multi-junction solar cells for space applications add structural demand layers with limited substitution options.

The global gallium market is projected to grow from approximately $2.32 billion in 2024 to $21.5 billion by 2034, representing a compound annual growth rate of 25.4%, according to recent industry reports. While these forecasts include downstream gallium-containing products (GaN devices, GaAs wafers), the trajectory underscores the strategic importance of the metal. US gallium demand is concentrated in defense and high-end electronics, where domestic production is essentially zero.

Supply diversification is beginning but remains negligible relative to global demand. MTM Critical Metals is developing a gallium recovery plant in Texas that targets early 2026 startup, using a patent-protected process for extracting gallium from industrial scrap. Kazakhstan plans to restart primary gallium production at the Padvolar refinery, targeting 15 t/yr from H2 2026. Metlen's facility aims for 50 t/yr of gallium by 2028. These projects represent important first steps but together account for less than 10% of current Chinese production capacity.

China retains the ability to expand production given high margins (industry gross margin estimated at approximately 40% in 2024). Chinese domestic production in 2024 reached 770 tonnes against global consumption of 630 tonnes, suggesting some capacity headroom. However, China's export policy, not geological capacity, is the main binding constraint for ex-China markets.

The outlook for H2 2026 remains structurally bullish for prices. The bull case centers on further tightening of Chinese export restrictions or acceleration of GaN demand from 5G/6G deployment and defense programs. The bear case would require a global electronics slowdown or rapid scaling of non-Chinese recovery capacity. The base case is sustained elevated prices with a persistent China vs ex-China premium as the market adjusts to the new geopolitical reality.