Last December, more than ten experts, scholars, and researchers in China’s energy industry issued a research report in the academic journal “China Mining,” warning that there is a critical weak link in Beijing’s pursuit of self-sufficiency. This weak link is the high dependence on imported helium gas, posing risks to the security of the supply chain. The ongoing Iran war has turned this concern into a reality.
Helium gas is a non-renewable and irreplaceable strategic rare gas that plays an essential role in key areas such as aerospace, semiconductor manufacturing, medical scanning equipment cooling, nuclear magnetic resonance imaging, low-temperature superconductivity, and national defense industries. The problem lies in China’s current over 83% reliance on helium gas imports.
According to a research report, “China’s demand for helium gas continues to grow rapidly, yet domestic supply is severely inadequate, heavily reliant on imports, and susceptible to significant fluctuations due to changes in the international geopolitical landscape.”
As reported by CNN, these concerns have rapidly manifested into reality. The Iran war has placed significant pressure on China’s supply chain. Analysts suggest that China is facing one of the most severe helium gas crises in decades, with prices doubling and supplies dwindling.
After the U.S.-Iran nuclear talks collapsed in February, the United States and Israel launched joint military operations against Iran from February 28 to eliminate Iran’s nuclear threat. Following this, Iran blocked shipping in the Hormuz Strait and launched missile and drone attacks on Gulf countries such as Qatar and the UAE, causing damage to facilities and casualties.
According to CNN, Qatar supplies one-third of the world’s helium gas demand and 54% of China’s demand. With Qatar’s helium production suspended and related energy facilities damaged, the entire supply chain may take several years to recover. Meanwhile, the pressure on China’s domestic helium gas supply continues to rise.
Cameron Johnson, senior partner at Shanghai’s Tidalwave Solutions, expressed concerns about the situation in Qatar, stating, “We cannot predict how we can secure reliable supply in the future.” He added, “Many suppliers are essentially saying, ‘We have no products to sell. Even if you offer us a million dollars, it’s no use, we have no goods.'”
Sublime China Information’s data shows that in the past month, the price of high-purity helium gas used in China’s industrial sector has doubled. Analysts predict that with the ongoing uncertainties in the Middle East, the disruptions in the global helium gas supply chain will persist, leading to further price hikes in China’s helium gas market.
Analysts warn that if the supply disruption persists, it could lead to chip factories shutting down, delaying life-saving medical imaging checks, and triggering chain reactions in broader economic sectors dependent on semiconductors, from electronics to automobile manufacturing.
The urgency for China to invest in domestic helium gas production has intensified. A research report published in December in “China Mining” pointed out that China’s domestically discovered helium gas resources have low overall grades, with few rich helium resources, making production challenging.
Aside from helium gas, the Iran war has also impacted the import of other raw materials. Tidalwave Solutions’ Johnson cautioned that the supply disruptions may be more severe than during the COVID-19 pandemic. All raw materials, especially those already under strain or needing import, now face scarcity, tight supply, and uncertainties about when normal operations can resume.
Before the Iran war, about one-third of China’s oil and 25% of natural gas imports relied on the Middle East region. The Middle East also serves as a significant source for petrochemical products like methanol, polyethylene, sulfur, and agricultural products.
The war in Iran has disrupted shipping in the Hormuz Strait, raising costs related to oil, leading to a substantial increase in the prices of plastic materials in southern China. This price surge has squeezed profit margins, disrupted logistics, and sparked panic buying across the entire supply chain in Dongguan Zhangmutou, China’s largest plastic trading center.