On 15 October, China’s Commerce Ministry said it will keep approving rare-earth licences for Europe, regardless what happens with the US truce. Investors are waiting for 10 November, when Beijing’s suspended 0.1% rule could return. It would then require foreign manufacturers to get a Chinese licence before exporting products that contain even small amounts of Chinese rare earths.
Since April 2025, Beijing has required a case-by-case licence for seven heavy rare earths, and it decides what each licence covers. In 2026, it shipped no dysprosium or terbium oxide to Japan while still exporting finished magnets. Japan’s dysprosium imports fell 82% in the first half.
By licensing the raw material and letting finished magnets through, Beijing makes magnets cheaper to build inside China than anywhere else. Outside China, dysprosium costs about 16 times the Chinese price. At the same time, Japan’s magnet exports fell about 35% in May. China’s magnet exports reached a three-year price high of $60.4/kg, and JL MAG’s gross margin rose five points to 21.7%.
Western producers do earn the premium, but only on the few tonnes they make. Lynas is one of the very few significant heavy separators outside China, and produced about eight tonnes of dysprosium and terbium in the first quarter, with Japan having contracted 75% of that output at negotiated prices. Making magnet metal outside China is harder: one Korean plant, for instance, shipped 45 tonnes from 1,300 tonnes of capacity in a quarter, while China exported 57,392 tonnes of magnets last year. Redesign to remove reliance on Chinese supply chain helps less than hoped, because the main technique still uses dysprosium or terbium, just less of it.
Risk. The argument depends on Beijing continuing to license finished magnets while withholding the raw material. Two developments would weaken it: dysprosium and terbium shipments to Japan resuming, or importers penalising Chinese magnets, starting with the US defence ban in January 2027.
Prediction. Whatever happens on 10 November, China’s average magnet export price stays above $55/kg, and JL MAG’s gross margin stays above 20%, through the first half of 2027.
Counter-signal: Chinese customs data showing dysprosium or terbium oxide exports to Japan resuming.
Photo by Christian Boragine on Unsplash