After China Restricts Exports, Rare Earth Prices Triple in a Month

Starting April 4, 2025, China will impose export controls on seven categories of medium and heavy rare earth-related items (including Samarium, Gadolinium, Terbium, Dysprosium, Lutetium, Scandium, Yttrium, etc.). This measure has caused rare earth prices to surge significantly within a month. As of May 1, the price of Dysprosium rose from $283.3 per kilogram at the beginning of April to $850, and the price of Terbium increased from $965 per kilogram to $3000. These price increases are the largest single-month increases recorded since May 2015 and have reached historic highs.

• Supply Constraints: China is the world's largest producer and exporter of rare earths, accounting for over 90% of refined rare earths globally in 2023. This export control directly restricts the supply of rare earths in the international market.

• Geopolitical Factors: This export control is seen as China's countermeasure to the tariffs and other trade measures imposed by the United States. The U.S. is highly dependent on Chinese rare earths, with approximately 80% of its rare earth imports coming from China, and the U.S. lacks its own refining capacity for rare earths.

• Strong Market Demand: Rare earths are key raw materials for high-tech industries such as electric vehicles, wind power, and military industry. As the electric vehicle and renewable energy industries rapidly develop, the demand for rare earths continues to grow.

• Impact on the U.S.: The U.S. military-industrial complex is highly dependent on Chinese rare earths, and its weapons system production may be impacted due to limited rare earth supplies. The rare earth inventory of U.S. military enterprises can only sustain production for 2 to 6 months.

• Impact on Global Industries: The automotive industries in Europe and Japan are also concerned about production stoppages due to the shortage of rare earth supplies. The production costs of global electric vehicles and high-tech industries may rise due to the increase in rare earth prices.

• Impact on China: By implementing export controls, China further consolidates its dominant position in the global rare earth market. At the same time, this also encourages China to accelerate the transformation and upgrading of its rare earth industry, improving resource utilization efficiency.

Although countries like the U.S. are working to find alternative supply chains, it is challenging to completely escape dependence on Chinese rare earths in the short term. China's export control measures on rare earths will continue to have a profound impact on the global market and may also prompt countries to accelerate the development of rare earth resources and the research and development of processing technologies.