* China wants to sell finished goods, not raw materials
* China building up military, needs germanium
(Adds background, details, comment from traders from para 3)
By Pratima Desai
LONDON, Feb 15 Spot prices of germanium dioxide
jumped to their highest levels in Europe in more than two years
this month as supplies of the material from China fell short of
demand, traders said.
Germanium dioxide GERM-DIOX-LON, used in speciality glass
for wide-angle camera lenses, has jumped to around $950 a kg,
the highest since early November 2008. Later that same month,
prices plummeted as consumers feared the financial crisis would
lead to a drop-off in demand and slashed their stocks.
Current levels compare with around $900 a kg last month and
$570 a kg in September last year.
"We have become very dependent on China for raw materials;
this year we will pay the price. Rather than sell germanium
dioxide, which now has a 5 percent penalty tax if exported,
China wants to sell the lens," a germanium trader said.
"Germanium is typical of the Chinese attitude today. China
Inc has shifted from a supplier of raw materials to a vendor of
value-added finished goods ... People are a lot more relaxed
about demand; they know the market needs the material."
Germanium metal GERM-LON, used to make optical fibres for
infrared devices and lenses for military equipment and as a
semiconductor in electronic devices, is up at around $1,300 a kg
from levels near $1,175 in late December last year.
Germanium plant closures in August and September last year,
partly because of attempts to cut environmental pollution, have
also left the market short of material, traders said.
"The Chinese government said last year it will buy germanium
for its domestic stockpile, and the U.S. has basically
liquidated its stockpile," another trader said.
"China is embarking on a huge build-up of its military. This
is forcing other Asian countries also to build up their military
... The result is more demand for germanium."
The U.S. withdrawal from Iraq and a reduced need for
investment in military equipment in the world's largest economy,
however, could offset some demand growth from Asia, he added.
(Editing by Jane Baird)
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