China’s rare earth magnet exports saw consecutive declines in April and May, with exports to the US experiencing a significant drop. Data released by the Chinese customs on June 20th revealed that export totals in April were halved compared to March, and further decreased in May by half compared to April.
Due to the substantial trade surplus between China and the US, the US imposed punitive tariffs on Chinese goods. In response, China implemented countermeasures, imposing export controls on critical industrial supply chain products, requiring export companies to apply for permits and setting export restrictions.
In early April, China decided to restrict the export of seven types of medium and heavy rare earth products and some magnets. This restriction sent shockwaves through important global supply chains in various industries such as automotive, aerospace, semiconductor, and military equipment.
As China controls approximately 80%-90% of the global rare earth supply and processing, this move heightened global concerns about the supply of critical minerals, making rare earth products a strategic focus in the US-China trade war.
Subsequently, China and the US continued to seek to restart trade talks, culminating in a meeting in London in early June.
According to Reuters news from Beijing on June 20th, Beijing indicated that approval processes will be expedited this month. However, industry insiders mentioned that Chinese customs officials are becoming increasingly cautious in handling rare earth shipments, particularly rare earth magnets, as only one code covers all magnets despite their diverse chemical compositions.
Previously, there were reports that customs had detained some low-performance rare earth magnet shipments intended for household appliances and consumer electronics due to confusion about how to implement Beijing’s export restrictions.
The Chinese Ministry of Commerce stated on Thursday that a “certain quantity” of rare earth export permit applications had been approved, without disclosing specific details. Rare earth magnet manufacturers JL MAG Rare-Earth and Innuovo Technology recently announced that they had obtained small quantities of export permits for some customers.
Data released by Chinese customs on Friday showed that in May, exports of rare earth permanent magnet magnets decreased by 52.9% compared to April, amounting to 1,238 tons, the lowest export volume since February 2020. Based on the month’s quoted prices, the total export value was estimated to be around $60 million, the lowest monthly figure since 2015 (excluding February 2020 and the outbreak of the pandemic).
In May, the US imported only 46 tons of magnets, less than one-tenth of the import volume in March. Other countries, such as Vietnam and Germany, with multiple Chinese companies, had much better supply situations. These two countries were the largest magnet export destinations last month, accounting for 19% and 17% of sales, respectively.
From January to May, rare earth magnet exports decreased by 14.5% compared to the same period last year, amounting to 19,132 tons, the lowest level since the same period in 2021.
(This article references reports from the Financial Times and Reuters)