China launches new policy on exports of dual-use items; no impact on lithium

China launched a new policy targeting exports of "dual-use" items to further streamline its customs inquiry process, although it is expected to have no impact on the Chinese lithium-ion battery industry, market sources said June 17.

China terms "dual-use" items as any products or services that can be used for both military and civilian applications.

Under the new policy issued June 16, if an exporter fails to present a license issued by China's export control administrative department to China's customs, and if customs has evidence indicating the goods may fall under export controls, they will probe and issue a notice to the exporter.

For goods that cannot be determined as dual-use items, China customs will submit an identification request to the national export control authority and handle the matter based on how the identification concludes, customs said in a June 16 statement.

During the identification or inquiry process, customs will withhold the release of the export goods.

Market talk showed that all shipments involving dual-use goods, including lithium batteries, rare earths and graphite, would be subject to stricter inspections by China's customs.

A lack of clarity on the development has stoked concerns that it may hinder exports coming from lithium-affiliated sectors.

China's domestic lithium market has already been under pressure for several years now amid rising supply and thinning demand.

Market reactions

"Currently, precursor materials and cathode materials are not affected by export restrictions. The controls primarily target flammable, explosive, or regulated rare metals and related items," said a Chinese cathode materials producer.

Lithium carbonate and hydroxide exports are not impacted, said a Chinese lithium chemicals producer.

"We don't hear anything about this," said another producer.

No major issues are expected if test reports issued by an accredited third-party agency could be provided, said a China-based trader.

A certification application is still required, and exports of both artificial and spherical graphite are not fully prohibited, said another China-based trader. The purpose is to prevent diversion to military end-use, he added.

Persistent oversupply and muted downstream consumption have been keeping the Chinese lithium market under pressure.

Platts, part of S&P Global Commodity Insight, assessed battery-grade lithium carbonate at Yuan 60,100/mt ($8,369/mt) June 16 on a DDP China basis, down Yuan 600/mt from a week earlier and Yuan 3,900/mt from a month ago.

China's lithium prices are down 90% from the multiyear highs seen in November 2022, according to Platts data.