Tariffs, counter-tariffs, export controls—China is once again playing the resource card in its ongoing trade dispute with the U.S., putting rare earth elements in the spotlight.
Since April 4th, export restrictions have been in place for most heavy rare earth elements. Market reactions have ranged from anxiety to frantic activity. The raw materials experts at TRADIUM have deliberately taken time to calmly assess the situation. Their conclusion: these measures are hitting an (already) tense market and could impact both supply security and price levels. Amid current uncertainties, which make realistic price formation nearly impossible, one of Germany’s most reputable suppliers of these raw materials has made the decision to suspend trading in dysprosium and terbium as physical assets temporarily.
Export Controls for Several Rare Earth Elements
As tensions in the trade conflict with the U.S. have escalated, China has intensified its actions and introduced new export restrictions for critical raw materials during the first week of April. In response to planned U.S. tariffs on Chinese goods, Beijing now requires special export licenses for certain rare earth elements. Specifically, the new rules apply to dysprosium, terbium, yttrium, gadolinium, samarium, lutetium, scandium, and their compounds, metals in which China holds a dominant market position. Over 90 percent of the world's rare earth production comes from China. These materials are essential for advanced technologies such as electric mobility, wind energy, and military applications.
In the initial weeks following the announcement, uncertainty prevailed. Some media outlets even temporarily interpreted the measures as an outright export ban. However, according to the news portal Rawmaterials.net that’s not the caseIn practice, though, exports are currently at a standstill, as Chinese exporters and authorities are still adapting to the new situation. Rawmaterials.net has compiled an overview of the specific export rules and application areas affected..
Experts Warn of Consequences: Strategic Stockpiling Becomes Critical
TRADIUM has closely monitored the market in recent weeks to get a clear picture and avoid jumping to conclusions. These industry insights have recently drawn the attention of several media outlets. Which industries are at particular risk from supply shortages? What price movements are possible? And how can long-term supply security be maintained? These are just a few of the pressing questions currently being raised.
Matthias Rüth, Managing Director of TRADIUM, warned in an interview with German news network ntv of serious consequences stemming from China’s export controls on heavy rare earths. “The world is almost entirely dependent on China, which controls over 95 percent of the market.” TRADIUM considers itself well-positioned: “We currently hold more than 300 tons of various critical raw materials in our Frankfurt warehouse, our customers have no immediate reason to worry.” However, for many industrial companies relying on just-in-time logistics, the situation is precarious: “Without inventory, we could be talking about just a few weeks before production grinds to a halt.” TRADIUM’s rare earth expert Jan Giese emphasized that building strategic reserves could be a crucial buffer, giving the EU and Germany valuable time during supply disruptions. “Countries like Japan, South Korea, and the United States already maintain government-backed stockpiles. In contrast, the idea is still mostly under discussion in the EU and hasn’t been implemented. This leaves Europe poorly prepared for potential shortages compared to international standards,” he explained.
Price Formation Currently Impossible, Asset Trading Temporarily Halted
For some of the affected rare earths, like terbium, non-Chinese stocks are virtually unavailable, and international trade has essentially ground to a halt. Since prices for these materials dropped significantly in 2022 and then remained stable for a long time, many traders saw no reason to stock up, especially since they could restock at low prices at any time. As a result, inventories are minimal, the market is paralyzed, and even basic price discovery is barely possible due to the lack of liquidity. Because of this, TRADIUM has temporarily suspended rare earth asset trading.
Expect Delays in Deliveries
With its latest move, China is reviving a familiar strategy, previously used in the case of tech metals like gallium and germanium. At that time, the introduction of a new licensing requirement led to a temporary export freeze, as processing the applications took time. A similar delay is now expected for rare earth elements. For Europe, a resumption of shipments within the next three months seems realistic; for the U.S., however, that remains uncertain, according to Giese. He currently sees no indication that China plans to completely cut off Europe from rare earths or related products such as magnets. “At the same time,” he added, “China has made it clear that it will respond to future trade policy developments in its relationship with the U.S. with appropriate measures.”
TRADIUM’s Expertise Featured in the Following Media Outlets:
Handelsblatt: In the worst case scenario, factory lines in Europe could come to a standstill
n-tv: Supply could collapse in a few weeks from 22 April 2025
Financial Times: China's rare earths controls prompt fears of auto shortages and shutdowns
IT-Boltwise: China's export restrictions threaten global automotive industry
Volatile Markets Require Informed Analysis – Stay Ahead with TRADIUM
The new export restrictions make one thing clear: geopolitical conflicts are deeply intertwined with global resource supply. It remains to be seen how the market will evolve in the coming weeks and months and which of the scenarios outlined by experts will actually materialize. What is clear, however, is that the issue of rare earth supply has now moved to the top of both political and economic agendas. TRADIUM will continue to monitor developments closely and provide regular updates and analyses. For the latest news on this and other related topics, visit Rawmaterials.net.
