Fresh Concerns Over the US' 80% Tariff on Hafnium

Hafnium

Trade Restrictions on Chinese Hafnium Raise Fears of Shortages and Price Increases

The recent tariff increase on hafnium exports from China to the US has raised significant concerns within the market. Under President Donald Trump's new tariff regime, hafnium is now subject to an 80% duty, which could create supply shortages in the coming months. This marks a substantial increase from the previous 25% tariff rate, placing additional pressure on the already limited global supply of hafnium.

US Dependency on Hafnium Imports

While the US does produce hafnium, it is not self-sufficient and still relies heavily on imports to meet domestic demand. Global hafnium production is relatively small, estimated at only 70-75 tonnes per year. The supply is concentrated in just four countries: France, the US, China, and Russia. In January 2024, China exported 1,499kg of hafnium to the US, according to Chinese customs data. However, North American producers have limited capacity, and competition from countries like Japan and South Korea, which have increased their hafnium purchases for nuclear power generation, is intensifying.

Hafnium is a critical material used in industries such as aerospace, semiconductors, space, and nuclear. However, the growing trade tensions and export restrictions are exacerbating the challenges faced by Western consumers, particularly since many have reduced imports from Russia due to the ongoing Ukraine conflict.

Tariff Increase and License Delays Exacerbate Hafnium Supply Issues

As tariffs on hafnium have risen, particularly with the new 34% reciprocal tariff on Chinese imports, many industry players are grappling with the uncertainty of future supply. In February 2024, US and Chinese trade partners discussed sharing tariff costs, but the idea was rejected by some Chinese sellers due to limited profit margins.

Furthermore, since September 2024, China has placed hafnium on its dual-use items export control list, creating significant delays in the export license approval process. These delays have worsened the supply situation, as exporters are now required to notify authorities about the end-users and their specific applications for the material. Additionally, some sellers are now being asked to visit the facilities where their metal is sold to verify its usage, putting further strain on traders.

Hafnium Prices and Market Outlook

The uncertainty surrounding tariffs and export delays has led to a rise in hafnium prices. Rotterdam prices have been relatively flat this year due to the lack of spot demand, as consumers have replenished stocks in advance. However, long-term contracts remain high, with some buyers paying close to $6,000 per kilogram or more, as firms signed multi-year contracts during earlier supply crunches.

On April 3, 2024, the market in China weakened slightly as suppliers accepted lower bid prices to cope with sufficient spot stocks and an anticipated decrease in purchases from US consumers. Prices for 99.95% grade hafnium crystal bar with 0.2% zirconium fell to ¥16,300–16,500 per kilogram ex-works, down from ¥16,500–17,000 per kilogram just a week earlier.