China Rare Earth Export Restrictions Disrupt Global Supply and Spur Price Volatility

China Rare Earth

Tightening China rare earth export restrictions are reshaping global supply chains as Chinese exporters suspend offers and overseas buyers scramble to secure inventory. The new regulations, imposed in early April, target seven medium and heavy rare earth elements critical to advanced electronics and defense systems.

Export Uncertainty Freezes Market Activity

China's customs agency is conducting a 45-day investigation into the export of dysprosium, terbium, gadolinium, lutetium, samarium, and yttrium. As a result, many Chinese suppliers have halted offers entirely, citing uncertainty around permit approvals. While some export offers were made at a 20–30% premium over domestic prices, most exporters chose to prioritize long-term relationships rather than exploit short-term price spikes.

This uncertainty has triggered a rush by overseas buyers to secure rare earth materials from non-China inventories. However, spot market activity remains subdued due to elevated pricing and unclear timelines on permit outcomes.

South Korea Ramps Up Imports Amid U.S. Tensions

South Korean firms—including Samsung, LG, and Hynix—have been warned against re-exporting rare earth-containing products to U.S. military end-users. This has raised concerns of even stricter oversight by Beijing, particularly around transshipments that may indirectly support U.S. defense supply chains.

Despite the warnings, South Korea has dramatically increased its rare earth imports from China. In Q1 2025, dysprosium oxide imports reached 17 tonnes, up from just 1.2 tonnes a year earlier, making South Korea the top importer. Terbium oxide imports also climbed to 2.8 tonnes, positioning the country as China's second-largest buyer after Japan.

Strategic Stockpiling Reflects Long-Term Risk

The surge in South Korean purchases appears to exceed immediate demand, suggesting a strategic stockpiling effort ahead of further supply restrictions. Meanwhile, overseas suppliers with inventory outside China are raising prices to capitalize on the constrained supply environment.

In 2024, China exported 150 tonnes of dysprosium oxide and 91 tonnes of terbium oxide globally, with Japan and South Korea accounting for the majority. The shifting trade flows underscore the geopolitical sensitivity of the rare earth market and the risks posed by regulatory fragmentation.

The Metalnomist Commentary

The China rare earth export restrictions are a strategic inflection point for global rare earth supply chains. While buyers scramble to manage short-term disruptions, the long-term signal is clear: diversification, transparency, and geopolitical alignment are now essential in securing access to critical minerals.