Without them, nothing works with electronics, car production or in the armaments industry: rare earths are popular worldwide – and have become significantly more expensive. Because China has limited exports in response to the customs dispute with the USA.
As expected, the Chinese export restrictions on the rare earth, which is so important for industrial production, has as expected. The notations for all metals summarized under the generic term rose by eight percent in May on a dollar basis, as the Association of the Bavarian Business (VBW) determined in their monthly raw material price index.
According to Terbium, the information was significantly more expensive with plus 18.9 percent, gadolinium with plus 16.9 percent and Samarium with plus 5.6 percent. Only the price for cerium decreased slightly by 0.6 percent. Highest stands had reached prices during the Corona pandemic at the beginning of 2022 when the global supply chains had stalled.
“Printing agent in Trade negotiations “
The Chinese government imposed export controls for several metals in April. These are important for the production of electronic components in the electronics, car and armaments industry. The most important raw materials of the 21st century are rare earth, they are essential for many industries, explain the DZ Bank’s raw material expert. “In Germany, this applies especially to the automotive sector. But the metals are currently essential in the area of renewable energies.”
“The trade conflict between the USA and China is jointly responsible for this development, as a result, the Chinese government introduced export controls for many important rare earths and magnets,” said VBW general manager Bertram Brossardt. The Chinese KP had imposed the controls as a revenge for the punitive tariffs announced by US President Donald Trump.
The People’s Republic of China is by far the most important producer of rare earths. China holds an almost monopoly, writes Marcus Weyerer, Director Etf Investment Strategy, at Franklin Templeton. “The country controls about 60 percent of the known reserves, 90 percent of the refinery capacities and over 90 percent of global production of certain refined rarer.” China’s control over this supply chain offers a permanent means of pressure in trade negotiations, according to the specialist.
Growing dependence on China
The Federal Association of German Industry (BDI) recently warned of China in critical raw materials. Experts also see the situation critically.
“The importance of rare earths will be increasing in the coming decades, not least because the metals and rare earth magnets in technologies that are essential for the energy transition play a major role,” emphasize the DZ bank experts Monika Boven and Bastian Reßing in an analysis.
Demand will double
IEA scenario invoices would show that this would more than double the demand for rare earths over the next 25 years. “A central challenge is therefore to identify safe supply and supply sources for rare earths and to set up permanently,” said Boven and Reßing.
However, China will probably remain the dominant player on the world market in the long term, and the dependencies could only be reduced, this is the conclusion.
