CITIC Securities: Ministry of Commerce strengthens export controls on dual-use items and is optimistic about investment opportunities in zirconia from Japan

The Zhitong Finance App learned that CITIC Securities released a research report saying that the Ministry of Commerce tightened export controls on dual-use items to Japan, which may cause an impact on Japanese zirconia manufacturers. Chinese zirconia powder and porcelain tile manufacturers are expected to benefit and expand their overseas market share.

Ministry of Commerce strengthens export controls for dual-use items to Japan

At 4 p.m. on January 6, 2026, the Ministry of Commerce's official website issued “Ministry of Commerce Notice No. 1 2026”. The announcement is as follows: Export of all dual-use items to Japanese military users, military use, and any other end user use that helps enhance Japan's military strength is prohibited. Organizations and individuals in any country or region that violate the above regulations and transfer or provide relevant dual-use items originating in the People's Republic of China to Japan will be prosecuted for legal liability in accordance with the law. This notice is officially implemented from the date of publication.

Yttrium oxide in dual-use items is an important raw material for yttrium to stabilize zirconia

According to the 2026 “Dual-use Items and Technology Import and Export License Management Catalogue”, yttrium-related items (including yttrium oxide and its mixtures) are included in the dual-use item export control list. Yttrium-stabilized zirconia formed by mixing yttrium oxide into zirconia is a high-end ceramic material with high ionic conductivity, excellent thermal stability, mechanical strength and corrosion resistance. It can be widely used in medical and dental implants, wear-resistant components, solid oxide fuel cells (SOFC), thermal barrier coatings (TBCs), oxygen sensors, film applications, catalytic carriers, etc.

Export controls may have an impact on Japanese zirconia manufacturers

According to QY Research, the global zirconia market will reach 4.23 billion yuan in 2025, and Japanese manufacturers such as DKKK (Daiichi Dilute Element Chemical Industry), Tosoh (Tosoh), and Showa Denko (Showa Denko Co., Ltd.) occupy important market positions. According to the official website of the relevant company, DKKK and TOSOH are directly or indirectly involved in military products, so CITIC Securities believes that they may be affected by export controls, and imports of yttrium oxide from China are blocked. According to the WeChat account of the Bureau of Justice, China accounts for more than 93% of the world's yttrium oxide production capacity. Due to rare earth export controls in the first half of 2025, the price of yttrium oxide increased by up to 50 times from the beginning of 2025 to the end of November 2025. Combined with the potential impact of this export control, we believe that the operations of Japanese zirconia manufacturers will be greatly impacted.

I am optimistic that Chinese zirconia manufacturers will seize the strategic opportunity period to expand their market share.

If the production of Japanese manufacturers is impacted by export controls, it will directly benefit Chinese zirconia powder manufacturers to speed up their market share. At the same time, customers of Japanese zirconia manufacturers will also be affected, which will benefit corresponding Chinese peers to gain market share.