Increased tenders from manufacturers, weak gallium market [SMM spot gallium weekly review]

SMM reported on June 27: The gallium market has recently remained sluggish in terms of transactions. As the year approaches its midpoint, from the perspective of end-use demand, except for the semiconductor industry, the magnetic material and PV industries have shown relatively small purchasing interest in gallium products. The market clearly exhibits a situation of weak demand, and speculative capital has largely withdrawn from the market, refraining from participating in the "junk trading time" at mid-year. However, due to the pressure from producers to reduce inventory through shipments, some producers have continued to actively ship their products. Recently, the tender sales of some producers have begun to increase, and they have also made slight concessions in prices. As a result, although market prices have remained generally stable over the past period, a weakening trend has become evident. Although the semiconductor and magnetic material industries have also taken purchasing actions, the overall buying volume remains small, with insufficient buying interest, and purchasing is mainly done as needed.

According to market feedback obtained by SMM, it is rumored that Guizhou Huajin Aluminum Co., Ltd. conducted a public auction sale of its metal gallium yesterday, with the quality standard being Ga4N compliant with the national standard GB/T 1475-2022. The final transaction price was around 1,700 yuan/kg. The actual transaction volume is unknown, but unofficial sources claim it to be in the hundreds of kilograms. Market participants have stated that the gallium products of Guizhou Huajin Aluminum Co., Ltd. are of stable quality and currently enjoy a good reputation in the market. Downstream acceptance of the company's gallium products is also high. However, with a tender transaction price of around 1,700 yuan/kg, overall, the price is still relatively weak, indicating insufficient buying interest in gallium from both the end-use market and the speculative market. The actual transaction volume also reaffirms this viewpoint. Additionally, according to unofficial market feedback obtained by SMM, it is rumored that Sanmenxia Aluminum Co., Ltd. successfully conducted a public auction sale of its 4N gallium yesterday. The final transaction price was around 1,700 yuan/kg. The actual transaction volume is unknown, but the tender volume was 1,000 kg. Market participants have stated that the base price for the 4N gallium tender of Sanmenxia Aluminum Co., Ltd. was 1,650 yuan/kg. The final transaction price of around 1,700 yuan/kg also proves that although market consumption capacity has been weak recently, rigid demand remains strong. Due to the belief of many market participants that as the year approaches its midpoint, many producers are increasing shipments and sales volume as required by their sales policies, there is still a reluctance to budge on prices. However, due to the cautious purchasing attitude of downstream buyers, this situation of weak supply and demand will continue until the end of June.

The situation for July remains uncertain at present and will depend on the new quarterly sales policies of producers. Nevertheless, many producers have also stated that they will not currently accept excessive room for price negotiation, but they will offer some price concessions to stimulate downstream customer purchases. After all, due to the current strong bearish sentiment among downstream buyers, some sales policies are needed to stimulate their buying interest. However, many downstream players have also indicated that due to their bearish outlook on the market, they will continue to purchase as needed, without stockpiling or accumulating excessive inventory of raw materials. It is expected that the tug-of-war between buyers and sellers will continue for some time. Market participants have noted that this week, some gallium plants have significantly increased their shipments, with tenders being held one after another at major plants. The final transaction prices of the tendered projects have generally been unremarkable. Coupled with the arrival of the overseas summer break in July and August, demand may further weaken. Therefore, it is foreseeable that market prices will experience a significant decline in the coming period. Some market participants have stated that a small amount of low-priced resources have already emerged in the market, but the current volume is relatively small and not yet representative. However, there are already signs of a weakening trend in gallium prices. As of the end of this week, the SMM 4N gallium average price was 1725 yuan/kg, unchanged from the previous week.

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