New Rules for Rare Earths: China Creates a Done Deal in the Raw Materials Market Before November 10
China is tightening its export controls, thereby already setting the tone for the renegotiation of the agreement, which expires on November 10. Since September 15, Chinese citizens may be barred from leaving the country for certain violations of export control regulations. Just nine days later, Xi Jinping and Donald Trump will meet in Washington.
Travel Bans for Violations of Export Controls
The new regulation allows Chinese authorities to impose a travel ban if a citizen has violated export controls or technology export regulations and this could jeopardize China’s industrial or technological security.
As a result, potential consequences no longer affect only the goods or the company. They also affect the individuals responsible for such transactions. For Chinese traders, managers, and export staff, a potential violation thus becomes a personal risk.
This could tighten the practical enforcement of export controls. Those in charge are likely to demand additional documentation, be more inclined to reject unclear transactions, and approve shipments more cautiously. As a result, fewer goods can leave the country without China imposing a formal export ban.
The bottleneck already exists
A survey conducted by the European Chamber of Commerce in China in September 2025 showed just how restrictive the licensing system already was before the new regulation took effect. Of the 141 export applications in which the Chamber supported its member companies, only 19 were approved. 121 applications were still pending, and another had been rejected due to an error.
The consequences were already being felt in Europe at that time. According to the European Central Bank, China’s exports of rare-earth magnets in May 2025 were about 75 percent below the previous year’s level. Some automakers were forced to halt production.
The supply bottlenecks extend far beyond the automotive industry. Wind turbines and defense technology require high-performance permanent magnets containing neodymium, dysprosium, or terbium. In the semiconductor industry, there are comparable dependencies on gallium.
The new regulation now increases the pressure on individuals within a licensing system that is already characterized by long processing times and decisions that are difficult to predict. This increases the risk of further delivery delays for European companies.
Beijing is strengthening its negotiating position
The timing is remarkable. Xi Jinping and Donald Trump are set to meet in Washington on September 24. A few weeks later, the agreement under which China has temporarily suspended some of its tightened export controls will expire.
The new regulation does not prejudge the outcome of the talks. However, it shows that China is continuing to expand its control mechanisms regardless. Beijing can make concessions on individual licenses or deadlines while simultaneously tightening state control over strategic exports.
Even an extension of the current agreement would not eliminate these new enforcement options. China is thus entering the talks with an additional lever of pressure.
Uncertainty Is Driving Up Prices
Under these conditions, it is becoming increasingly difficult for traders to provide reliable prices and delivery dates. If an approval is delayed, promised goods may remain tied up for weeks or months. At the same time, customers are placing orders earlier and building up larger inventories. This further reduces the freely available supply.
Following the export controls implemented in April 2025, prices inside and outside China diverged significantly. Benchmark Mineral Intelligence estimated the North American price for dysprosium oxide in 2025 to be 4.4 times the domestic Chinese price. A similar gap was observed in Europe for terbium. The International Energy Agency also noted that prices in import markets remained elevated even after trade volumes had partially recovered.
The potential price reactions are amplified by the structure of these markets. For technology metals and heavy rare earths, available quantities are small and supply chains are highly concentrated. Even a limited decline in supply can therefore have a disproportionate impact on prices.
We will be following the meeting very closely
Whether the situation will continue to escalate or ease for the time being remains to be seen in the coming weeks. The new regulation does not prove that China will further reduce its exports. However, it does increase the likelihood that existing controls will be enforced with particular care and consistency.
Therefore, what Xi Jinping and Donald Trump agree upon will not be the only decisive factor. Equally important will be how quickly and under what conditions China subsequently issues export licenses.
We will closely monitor the meeting on September 24 and developments leading up to November 10, and we will report as soon as new information becomes available.