Geopolitical shocks, nitrogen enters the accelerated price increase channel

Source: International Financial News

Due to the attack on the Ras Laffan Energy Hub in Qatar causing production disruptions, helium prices have surged dramatically over the past two months, impacting industries such as semiconductor manufacturing, healthcare, and aerospace.

The global economic impact of the Israel-U.S. conflict has now far exceeded the oil sector, with helium becoming one of the most fragile commodities.

Helium is most famously used to inflate balloons for flight, but its industrial applications are even more important.

Qatar accounts for about one-third of the world’s helium supply, but since the attack on the Ras Laffan Energy Hub at the end of February causing production halts, spot helium prices have doubled.

The surge in helium prices has affected industries like semiconductor manufacturing, healthcare, and aerospace. As the cost of this vital industrial raw material rises, prices for products such as smartphones and MRI machines may continue to climb.

Global supply disruption accounts for 30%

The importance of helium lies in its irreplaceability.

Helium is chemically stable, extremely lightweight, and has very high thermal conductivity at low temperatures. These properties make it indispensable in industries with strict stability, cooling, and pollution control requirements.

Unlike many industrial raw materials, due to its unique physical properties, helium has no substitutes in some high-precision applications. Moreover, unlike most resources, helium is rarely produced alone. In Qatar and some other countries, helium is a byproduct of liquefied natural gas (LNG) production.

This means helium supply is entirely dependent on natural gas production: when natural gas output declines, helium production also decreases.

The helium supply chain is also highly concentrated. The U.S. and Qatar together account for about three-quarters of global supply. Additionally, exporting helium is not easy. It requires highly specialized cryogenic containers to keep helium at extremely low temperatures during transport. If exported from Qatar, these shipments must pass through narrow trade routes such as the Strait of Hormuz, making the supply chain highly vulnerable to geopolitical conflicts.

Over the past two months, helium prices have soared mainly due to the attack on the Ras Laffan Energy Hub in Qatar causing production disruptions.

Since helium has no official price benchmark, it’s difficult to give an exact figure. Early reports indicated a 50% price spike during the initial phase of the conflict, and recent estimates show that since late February, helium prices have doubled.

Anish Kappadia, CEO of market research firm AKAP Energy, said that pressure on the helium market is unlikely to ease in the coming months. “Helium storage is extremely difficult, so unlike oil or natural gas, which have large reserves for shortages, helium’s storage capacity is very limited.” Even if the Strait of Hormuz reopens, it will take time to resume operations of specialized transport containers that operate at near-zero Kelvin (about -460°F).

Three industries most affected

In this context, three industries will be most impacted by rising helium prices.

The semiconductor industry is at the forefront. Helium’s excellent thermal and heat transfer properties make it crucial for rapid cooling, an essential part of chip manufacturing. In fiber optics, helium is also used for cleaning vacuum chambers.

According to the U.S. Geological Survey, about 17% of helium consumption is related to controlled atmospheres, fiber optics, and semiconductor production. This means that any sustained increase in helium costs could ultimately affect the prices of consumer electronics, cloud infrastructure, and electric vehicles, which rely heavily on advanced chips.

The booming development of artificial intelligence has significantly increased demand, and shortages or sharp price hikes could slow the entire industry.

Notably, South Korean chip manufacturers like Samsung Electronics and SK Hynix hold 4 to 6 months of helium inventories, providing a temporary buffer. However, analysts warn that if disruptions continue into the second quarter or beyond, supply chain pressures could intensify sharply.

Additionally, the healthcare industry is also affected by helium shortages.

MRI machines rely on liquid helium to cool superconducting magnets to extremely low temperatures. Without helium, these machines cannot operate. This is not a marginal application.

According to the U.S. Geological Survey, by 2025, medical imaging will account for about 15% of helium demand, making hospitals and diagnostic centers particularly vulnerable to price surges and supply delays.

As industry expert Tobias Gilke stated, a single MRI system consumes an amount of helium equivalent to 90k party balloons. If supply chains tighten further, maintenance providers may struggle to service hospitals promptly, affecting patient treatment progress.

Although there are now MRI scanners that do not require helium, new equipment is more expensive to install, and existing devices still need helium replenishment.

The aerospace sector also faces risks, as helium is used for pressurizing fuel tanks, leak detection, and cooling in rocket propulsion systems. It remains a critical input for both public and private space missions.

This involves NASA’s Artemis program, SpaceX, and other commercial operators. Since aerospace accounts for about 9% of U.S. helium usage, price increases could raise launch costs and put additional pressure on research budgets.