The Zhitong Finance App learned that Debon Securities released a research report saying that China is currently the largest producer of germanium. Germanium production fluctuated from 2008 to 21, and germanium production accounted for about 56.6% to 72.73% of the world's total production. The metal germanium and its compounds are often listed as basic raw materials for important industries such as information and communication, bioscience, modern aviation, and new energy. Since March 2023, the price of germanium has fallen and then risen, and remained at a high position of about 10,000 yuan/kg in early December. The bank said that GW Starlink and G60 Starlink are expected to drive demand for germanium for solar cells to 76.08 tons by 2027. China's Starlink plan will bring a large increase in demand for germanium used in solar energy, and germanium may be in short supply in the future.

Debon Securities's views are as follows:

Germanium has unique properties and can be used in many fields. Recently, prices have remained high.

Germanium has many excellent photoelectric properties such as partial transparency in the infrared electromagnetic spectrum, extended three-dimensional network formers of glass germanium oxygen, low dispersion and high infrared refractive index. The metal germanium and its compounds are often listed as basic raw materials for important industries such as information communication, biological science, modern aviation and new energy, and are widely used in polyester catalysts (PET), optical fiber communication, high-frequency ultra-high frequency electronic devices, solar photovoltaic cells, infrared optics, aerospace measurement and control, nuclear physics detection, biomedicine, etc. Since March 2022, the price of germanium fell first and then rose, and remained at a high position of about 10,000 yuan/kg in early December 2023.

It is difficult to mine germanium independently. China's germanium reserves account for a relatively high production, and future conventional supply will be rigid.

Germanium is difficult to produce independently. It is commonly found in the form of compounds in sphalerite, sulfur-arsenic-copper ore, silver-lead, iron ore, and coal mines. Global germanium reserves are dominated by the US (45%) and China (41%). China is currently the largest producer of germanium. Germanium production fluctuated from 2008 to 21, and germanium production accounted for about 56.6% to 72.73% of the world's total production. Due to environmental restrictions, etc., the global conventional supply of germanium is expected to peak at 170 tons in the future, and subsequent demand will be covered by secondary supply (recycling).

China's Starlink plan will bring a large increase in demand for germanium used in solar energy, and germanium may be in short supply in the future.

Global demand for germanium is expected to be 259.27 tons by 2026, with a compound growth rate of 12.12% from 2022 to 2026. The growth rate of germanium supply is relatively slow. The global germanium supply and demand gap is expected to reach 48.87 tons by 2026. (1) Solar energy sector: Global germanium accounts for 17% of solar energy demand in 2019. Germanium is used for multi-junction gallium arsenide battery substrates, and multi-junction gallium arsenide batteries are also mostly used in space photovoltaics. China's G60 Starlink plans to launch 12,992 satellites, with a total of about 25,000 GW Starlink and G60 Starlink are expected to drive 76.08 tons of germanium demand for solar cells by 2027. (2) Infrared field: According to QYResearch, the global infrared lens market is expected to reach US$953 million in 2029, with a compound growth rate of 7.72% from 2022 to 2029. According to “Analysis of the World Germanium Mining Supply and Demand Situation in 2021-2023” - Chen Xingquan et al., global demand for germanium in the infrared sector is expected to grow at an average annual rate of 6.2%, with demand of 54, 73, 95.5, and 114.5 tons in 2020, 2025, 2030, and 2035. (3) Optical fiber sector: Yuanzhe Consulting predicts that the global optical fiber market will be 15.07 billion yuan by 2031, with a compound growth rate of 6.17% from 2021 to 2031. Refer to “Analysis of the World Germanium Mineral Product Supply and Demand Situation 2021-2023” - Chen Xingquan et al. Combined with the annual growth rate of optical fiber demand, the germanium requirement for optical fiber is expected to increase from 60.5 tons in 2020 to 90.8 tons in 2025, compared to about 122.5 tons in 2030 and 147 tons in 2035. The demand CAGR for 2020-2035 is 6%.

Investment advice: Focus on the Yunnan germanium industry (002428.SZ) - It has a complete germanium industry chain and rich, high-quality germanium ore resources. As of 2022, the company's germanium metal reserves are about 633.29 tons, and the production and sales volume of germanium products is the highest in the country. The company's revenue in 2022 was 537 million yuan, with germanium products accounting for 81.18%; in 2023, H1 revenue was 282 million yuan, and germanium products accounted for 87.92% of revenue. Follow Chihong Zinc-Germanium (600497.SH), Zhongjin Lingnan (000060.SZ), and Luoping Zinc-Electric (002114.SZ).

Risk warning: China's demand for satellite launches fell short of expectations; the sell-off of germanium stocks exceeded expectations; secondary supply of germanium exceeded expectations.