Highlights

• China has effectively cut off Japan from gallium and germanium shipments following tightened export controls, with Germany becoming the sole recipient of gallium in early 2026.
• Export controls are evolving into precision allocation mechanisms, with China selectively directing critical mineral supply based on geopolitical alignment rather than market fundamentals.
• Control of processing and export licensing—not resource scarcity—is now the primary driver of market power in strategic materials, reinforcing the Great Powers Era 2.0 thesis.

A new report (opens in a new tab) from Germany metals trader Tradium GmbH (opens in a new tab) highlights a sharp geopolitical shift in the trade of gallium and germanium—two critical inputs for semiconductors, defense electronics, and advanced optics.

China has effectively halted shipments to Japan following tightened export controls introduced earlier this year. While officially tied to military end-use restrictions, the outcome is broader: Japan—previously a top importer—is now cut off from both metals. The trader also cited RawMaterials.net report (opens in a new tab).

Supply is concentrating. Germany was the sole recipient of gallium in early 2026, while germanium flows have become volatile, with limited shipments routed to countries including Russia and South Korea.

The structural signal is clear: export controls are evolving from policy tools into precision allocation mechanisms. China is not broadly restricting supply—it is selectively directing it.

For investors, this reinforces a core REEx thesis: critical mineral markets are increasingly shaped by geopolitical alignment, not just supply-demand fundamentals---the Great Powers Era 2.0 thesis.

Japan’s likely response—accelerating alternative sourcing and alliances—mirrors the broader Western pivot now underway across rare earths and strategic materials.

Bottom line: control of processing and export licensing—not merely resource scarcity—is driving market power.