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Europe is facing an even tighter squeeze on helium supplies as China cuts off exports of the industrial gas that is vital for manufacturing microchips and the functioning of medical devices including MRI scanners.
Beijing earlier this month announced export controls on the natural gas byproduct, which has been in scarcer supply since the conflict in the Middle East cut off exports from the Gulf.
While China is not itself a major producer of helium, Russian supplies of the gas had been flowing through the country to Europe, according to analysts.
Russia accounts for almost 10 per cent of global helium production, while Qatar was responsible for a third of the world’s supplies before the outbreak of the Iran war.
Beijing acted last week since it imports most of the helium used by its industry and hospitals.
“China isn’t a source; it’s a conduit”, meaning the halt “pinches a re-export valve Europe had been leaning on”, said Seokjoon Kwon, a professor at Sungkyunkwan University in Seoul. The ban, which was announced as the fragile ceasefire between the US and Iran came under pressure, was an indicator that China was preparing for “renewed scarcity”, he added.
The price of the gas being bought for immediate delivery has roughly doubled since the start of the conflict, while prices in long-term contracts have also been rising, analysts said. That has come as major producing facilities, including QatarEnergy’s Ras Laffan complex, the world’s largest liquefied natural gas facility, have been forced to halt production.
The EU banned direct imports of Russian helium in 2024. But some gas has been flowing to Europe via China, experts said.
Chinese re-exports to Europe have been rising over the past 18 months, and remained elevated even after the outbreak of the Iran war, according to estimates by consultancy AKAP Energy.
Although the helium market is opaque, AKAP estimated that China was still re-exporting about 16 per cent of its helium imports, on average, between March and May this year, after the war started.
Russia itself imposed export restrictions on helium in April, but not an outright ban. The Chinese ban came soon after a Ukrainian attack in June on the Orenburg gas processing and helium plant in western Russia, near the border with Kazakhstan.
Cliff Cain, commercial manager at London-listed Pulsar Helium, said the market situation had worsened over the past several months, with shortages affecting users such as aerospace and welding companies. Pulsar was “getting a lot of queries” and speaking to public and private sector buyers, including those in the US and Japan, he said.
With pre-Iran war inventories of the gas running low, “the coming weeks will reveal whether diversification away from Qatari supply happened quickly enough to avoid production impacts”, said Nick Lawson, executive chair of Ocean Wall, a merchant bank.
Sabina Ciofu, international policy and strategy lead at trade association techUK, said its members had been sourcing supplies from alternative channels, but that “prolonged constraints could have wider implications across global technology supply chains”.
Ajit Manocha, president of industry body SEMI, said: “The market has clearly tightened, and semiconductor companies are managing higher prices, tighter allocations and more complex sourcing.”
The semiconductor supply chain may be more able to absorb cost increases than sectors such as healthcare, analysts said. Available supplies are being prioritised for strategic sectors, including certain technology, healthcare and government contracts, with others such as consumer electronics likely to lose out, they said.
US users may be more cushioned, since the country produces substantial volumes of helium domestically. Premier Inc, which sources helium supplies on behalf of hospitals in the US, said medical-grade helium remains prioritised and “members are not reporting disruptions affecting MRI operations or mixed-gas products”.
