Suspension of Chinese restrictions on rare earth elements export: Shadows over price stability and availability

Background: From escalation to temporary suspension

China, with 60–70% of global REE production and 85–90% of processing, has been using export restrictions as a geopolitical tool since April 2025.[2] At that time, seven elements were covered, including Dy and Tb – key for permanent magnets in EV engines and wind turbines. Export licenses and a ban on military purposes caused immediate disruptions: Dy prices increased by 15%, Tb by 20%, and approval times extended to 60 days.[3]

On October 9, 2025, MOFCOM announced further tightening: adding five REE (holm – Ho, erb – Er, thulium – Tm, europium – Eu, ytterbium – Yb) as well as limits on graphite and separation technologies.[4] The market reacted with panic – futures contracts soared, signaling supply gaps. The suspension from November 7 is a response to pressure from the US (after Trump's elections) and the EU, but it does not reverse the April measures. As Reuters emphasizes, this is a 'gesture, but not a solution' – Dy and Tb remain under strict control.[5]

What did the chinese government approve?

The MOFCOM communiqué specifies the suspension of six October announcements on strategic resources.[6] Specifically:

The decision is intended to stabilize supply chains, but experts warn: this is only a postponement, not an elimination of dependence on Beijing (99–100% of global Dy and Tb supply).[7]

Price Increases: Forecasts for 2026 and further risks

Even with the suspension, the REE market awaits volatility. Dy and Tb, not covered by the relief, drive price pressure. Non-Chinese sources of these elements already cost 3–4 times more than Chinese ones (Dy: ~250 USD/kg spot, Tb: >1000 USD/kg).[8] This price bifurcation will persist through 2026, with premiums for alternatives, which will increase global costs by 200–300%.

Dy and Tb: After the April restrictions, prices in Europe tripled within a month. Forecast for 2026: increase by 10–20% in Q1, with volatility throughout the year due to licensing delays (weeks–months). Current prices: Dy oxide 191–198 USD/kg, Tb 816–823 USD/kg (November 5, 2025), but experts expect a rebound after declines from 2024.[9]

Ho: The suspension stabilizes in the short term, but as a heavy REE, it is subject to similar bottlenecks. Oxide prices ~61–62 USD/kg increasing by 15–25% in an escalation scenario.[10]

Globally, the REE market worth 10 billion USD in 2025 will grow by 8%, but restrictions on Dy/Tb (15% demand growth in 2026) will cause price jumps of 20–30% in EV and RES sectors. Dy and Tb as top 3 in terms of price risk.[11]

Unavailability: Chronic supply gaps

The suspension does not solve the core problem: 99–100% of Dy and Tb from China, with restrictions causing a 60% drop in supply volumes in Q1 after restrictions. This creates 'structural shortages' through 2026.[12]

Dy and Tb: Midstream scarcity – lack of separation machines outside China leads to weekly–monthly delays. Inquiries for alternatives (e.g., from recycling) have increased, but supply does not keep up; warnings of 'prolonged dependence' until 2027.[13]

Ho and others: Suspended, but potential resumption in 2026 threatens multi-quarter bottlenecks, especially in high-tech applications (lasers, magnets). Global production outside China is only 12% (Australia) + 6% (USA), which will not cover 20% of the gap from restrictions.[14]

As a result: automotive and energy industries risk downtimes – e.g., F-35 consumes 900 pounds of REE magnets, and lack of Tb will delay production by months. Forecasts of 15% Dy/Tb deficit in 2026, deepening global shortages.[15]

Summary: Breath with a catch

The decision of the Chinese government from November 7, 2025, suspends new restrictions, but leaves Dy and Tb as time bombs. Price increases of 20–300% (depending on the source) and chronic unavailability (60% supply drops, deficits until 2027) threaten market stability. This is a reminder: dependence on one supplier is a risk that escalates costs and disrupts chains. The industry must monitor – the next year will decide the shape of global REE supply.[16]

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