China’s exports of rare-earth magnets plummeted after it imposed controls on their overseas sale, emphasising Beijing’s dominance of a critical input into electric vehicles and jet fighters that has taken centre stage in tensions with the US. Total export volumes of rare-earth magnets from China fell 74 per cent in May from a year earlier, according to a Wall Street Journal analysis of Chinese customs data, the biggest percentage decline on record dating back to at least 2012.
Exports had fallen 45 per cent in April in year-over-year terms. The 1.2 million kilograms of rare-earth magnets exported in May marked the lowest level since February 2020. Exports of rare-earth magnets to the US slowed to a trickle, declining 93 per cent in May from a year earlier to roughly 46,000kg. That followed a 59 per cent year-over-year drop in April.
The figures released on Friday are the first to show the extent to which Beijing’s curb on rare-earth magnets further choked off supplies to the world in May, which drew the ire of the Trump administration and brought the two countries back to the negotiation table this month. Beijing on April 4 began requiring licences for exports of certain rare-earth metals and related products. That included magnets made with rare-earth metals such as dysprosium and terbium that are essential to making a range of goods. The controls restrict exports to all countries, not just the US, but came during one of the most heated periods of the US-China trade conflict.
China’s move to restrict rare-earth magnets was felt acutely through the global automotive, electronics and defence industries. China has a near-monopoly on rare earths production. It mines about two-thirds of global rare-earth minerals and processes about 90 per cent of the world’s supply.
A trade truce between the US and China in mid-May in which both sides agreed to reduce tariffs for 90 days was expected to ease the flow of these magnets. But rare-earth exports remained constrained, and US automakers warned they could face production stoppages as a result.
The US accused Beijing of slow-walking licence approvals. China blamed the Trump administration for breaking the agreement. That brought trade representatives from the US and China to London this month to get the trade truce back on track, subject to final approval from President Donald Trump and Chinese leader Xi Jinping. The deal appears to allow China to keep the export-control system for rare earths in place, which would allow Beijing to curb supplies again in the future. Licences for US manufacturers to import rare earths from China would have a six-month limit, people familiar with the deal said. A spokesman for China’s Commerce Ministry said on Thursday that China had been accelerating its review of rare-earth export licence applications.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)