logo
China's rare earth export controls are good for Beijing, bad for business

China's rare earth export controls are good for Beijing, bad for business

Time of India16 hours ago
China's export restrictions on rare earths brought parts of the global auto supply chain to a halt and U.S. President Donald Trump to the negotiating table. But at home, they're a big headache for companies already struggling with a slow economy.
Beijing curbed rare earth and magnet exports in April in retaliation against U.S. tariffs, driving down magnet makers' offshore sales at the same time as they face pressure from a weak economy and tough times in one of their key markets - EVs.
The pain for magnet makers is unlikely to ease soon, even after the U.S. announced a deal with China on June 27 to get rare earths flowing again.
Any agreement would take time to implement, said Baotou Rare Earth Products Exchange, a state-backed trading platform, noting that inventory was piling up in warehouses, in a post on WeChat 12 hours after the deal was announced.
The export curbs led to a 75% drop in magnet exports in the two months after the restrictions were imposed and forced several global auto makers to pause some production.
Live Events
The restrictions caused a "crisis" for some local magnet makers, the Baotou exchange, based in Inner Mongolia, one of China's rare earths hubs, said in May.
While China produces 90% of the
rare earth magnets
used worldwide and consumes most of them, exports ranged from 18% to 50% of total revenue in 2024 among the 11 largest publicly listed magnet producers by capacity, public filings show.
"Their sales are now being squeezed from both ends - disrupted exports and flagging domestic demand," said Ellie Saklatvala, head of metal pricing at commodities information provider Argus.
"They have temporarily lost an important part of their customer base, with no certainty about when they will regain it."
Rare earths are politically sensitive in China and few major listed rare earth companies have commented directly about how the controls will affect their business.
However, two rare earth magnet producers told Reuters revenue is expected to fall this year, speaking on condition of anonymity given the issue's sensitivity.
"It will have a huge impact on the export business, although it's hard to tell exactly how much of a loss we will suffer for now," said one of the rare earth magnet producers, requesting anonymity due to the sensitivity of the matter.
Small- and medium-sized producers cut production by around 15% in April and May, according to another source with knowledge of the matter, who also declined to be named.
EXPORT CURBS' IMPACT UNDERESTIMATED
Much like U.S. chipmaker Nvidia, China's rare earth magnet makers are victims of their own importance.
Caught in the geopolitical crossfire of Washington's tariffs and China's retaliation, share prices of the listed magnet makers slumped in April after the export curbs were announced. However, they have climbed off their lows over the past three months.
The rebound does not appear to be based on any reasonable forecast of the industry's future, said Cory Combs, head of critical mineral research at consultancy Trivium China.
"I can see various market outlooks, more or less negative depending on the assumptions, but none of them yield a sustainable rise in share price like we're seeing," he said.
Many magnet makers are also private, so share prices only tell a limited story, he said.
Many producers already faced weaker conditions at home, including a price war among electric vehicle makers, a key customer segment, that has seen manufacturers demand discounts from suppliers.
In addition, the highly customised nature of many magnet products makes it hard to resell cargoes domestically, forcing magnet makers to store them during the wait for licenses, four sources said, also speaking anonymously.
CHALLENGES MAY SPUR CONSOLIDATION
Listed magnet maker Baotou Tianhe Magnetics Technology Co noted the export curbs in its annual report released in late April, and said its export revenue could decline if the international situation deteriorated.
Yantai Zhenghai Magnetics said last week it had received export licenses and production was normal. It referred investors to its upcoming financial filings for specific operating results.
However, a quick return to the previous status quo is unlikely if the rare earth controls are implemented in a manner similar to those on other critical minerals including germanium and antimony, according to Argus' Saklatvala.
China imposed export controls on germanium and antimony over the course of 2023 and 2024. Despite being used mostly by civilian industries, which in theory should face few issues getting licenses, exports have still not recovered fully, customs data shows.
Europe is receiving only a tiny fraction of the antimony it imported from China before export controls were imposed last September. The shortages are already causing major problems for lead-acid battery makers, commonly found in gasoline engines.
"Looking at China's recent export controls on other critical minerals - such as antimony - it is clear that it can sometimes take longer than expected for exports to resume and normalise," Saklatvala added.
The large amounts of information required by export license authorities are a permanent change for the industry that will add delays and costs for producers, said David Abraham, affiliate professor at Boise State University, in Idaho.
"In some sense, there's no going back," he said.
In an industry that has hundreds of manufacturers, the pressures could lead to consolidation, he said.
"I do not know if Beijing sees that as a bad thing, because further consolidation is helpful for controlling and understanding where materials go."
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Trump Promises More Weapons for Ukraine and Criticizes Putin
Trump Promises More Weapons for Ukraine and Criticizes Putin

Mint

time15 minutes ago

  • Mint

Trump Promises More Weapons for Ukraine and Criticizes Putin

President Donald Trump said he'd ship more weapons to Ukraine, marking an apparent reversal after the Pentagon halted flows of some air-defense missiles and artillery shells to the country. 'We're going to send some more weapons,' Trump told reporters at the start of a dinner with Prime Minister Benjamin Netanyahu at the White House on Monday evening. 'We have to. They have to be able to defend themselves. They're getting hit very hard now.' Trump didn't specify what the US would provide except to say the armaments would be 'defense weapons primarily.' The president's comments will offer a measure of relief to Ukraine's President Volodymyr Zelenskiy, who spoke with Trump on Friday in an effort to get the halt lifted. Trump has also tried to broker peace in talks with Moscow, which have so far failed to end the war. Russia has been pounding Kyiv and other Ukrainian cities with record numbers of drones and missiles. Trump lamented the thousands of people who have been killed and said he wasn't happy with President Vladimir Putin for keeping up attacks. 'I'm disappointed, frankly, that President Putin hasn't stopped,' Trump said. 'I'm not happy about it.' The Pentagon said last week the pause was necessary while the US reviews its stockpiles and weighs the need to save weapons for other threats. While stockpile numbers are classified, the weapons Ukraine needs most aren't urgently required elsewhere and there was no immediate need to deny the country weapons that were already on their way, they said. The Wall Street Journal reported earlier Monday that Trump had told Zelenskiy in the Friday phone call he'd ordered a review of Pentagon munitions stockpiles after the US attack on Iran last month but didn't order the halt. White House spokeswoman Karoline Leavitt told reporters Monday that Defense Secretary Pete Hegseth had ordered the review when he took office. This article was generated from an automated news agency feed without modifications to text.

Rupee weakens by 46 paise to close at 85.85/$
Rupee weakens by 46 paise to close at 85.85/$

Time of India

time23 minutes ago

  • Time of India

Rupee weakens by 46 paise to close at 85.85/$

Mumbai: The Indian currency weakened nearly half a rupee to close at 85.85 per dollar on Monday, from its previous close of 85.39/$1 as uncertainty about US tariff policies resurfaced with President Donald Trump's threat of an additional 10% levy on Brics countries. The rupee opened at 85.57/$1, and weakened till 86.03/$1 on Monday, before pairing its losses and closing at 85.85/$1, likely due to intervention by the Reserve Bank, traders said. "Markets were expecting something on the trade deal with the US, but nothing came up, and the BRICS statement deteriorated sentiments. We were the second worst performing currency in Asia, and due to potential RBI intervention, we erased some losses and to be the third worst-performing Asian currency," said Dilip Parmar, currency research analyst at HDFC Securities. Japanese Yen and the Thai baht were the two worst performing Asian currencies. Traders expect the rupee to move in the range of 85.50/$1 to 86.25/$1 on Tuesday, ahead of July 9, when Trump will unveil his new stand on tariffs. In a social media post, President Donald Trump stated a new tariff policy, calling for countries "aligning themselves with the Anti-American policies" of the BRICS developing nations to be charged an extra 10% tariff, with no exceptions to be granted. India, along with Brazil, China, Russia, South Africa are part of BRICS. The dollar index gained slightly at 97.6, from 96.9 previously. "The BRICS comment has put the India-US deal in jeopardy and we are awaiting clarifications from India-US on the matter. The rupee has fallen as the market is not expecting the deal to be done soon," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.

'Well Deserved': Israeli PM Benjamin Netanyahu Nominates Donald Trump For Nobel Peace Prize
'Well Deserved': Israeli PM Benjamin Netanyahu Nominates Donald Trump For Nobel Peace Prize

News18

time36 minutes ago

  • News18

'Well Deserved': Israeli PM Benjamin Netanyahu Nominates Donald Trump For Nobel Peace Prize

Last Updated: Israeli Prime Minister Benjamin Netanyahu nominated US President Donald Trump for Nobel Peace Prize on Monday. Israeli Prime Minister Benjamin Netanyahu nominated US President Donald Trump for the Nobel Peace Prize, calling it 'well-deserved", during their third meeting since January 20 inauguration at the White House on Monday (local time). Handing over the letter to Trump, which Netanyahu sent to the Nobel Prize Committee, the Israeli Prime Minister said, 'you should get it". 'I want to present to you, Mr President, the letter I sent to the Nobel Prize Committee. It's nominating you for the Peace Prize, which is well deserved, and you should get it," he said, as the two leaders met for a closed-door meeting, reportedly on Gaza ceasefire and Iran nuclear crisis. More to follow… First Published: July 08, 2025, 05:49 IST

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store