MP, USAR, NEO: China's Rare-Earth Exports to U.S. Declined 80% in May
China's exports of rare-earth metals, minerals and magnets to the U.S. fell 80% in May as Beijing tightened controls on overseas sales.
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The sharp decline in shipments to the U.S. is significant as rare-earth metals are critical components of technologies from smartphones to electric vehicles, as well as solar panels and military equipment such as fighter jets and missile systems.
Rare-earth metals have become a major point of contention between the U.S. and China in their ongoing trade dispute and tariffs between the two countries. Total export volumes of rare-earth elements from China fell 80% in May from a year earlier, according to Chinese customs data. That was the biggest percentage decline on record.
Businesses Scramble
Publicly traded companies that are involved directly in the extraction and processing of rare-earth metals include MP Materials (MP), USA Rare Earth (USAR), and Neo Performance Materials (TSE:NEO). Despite a 90-day truce in its trade war with the U.S., China appears to be maintaining tight control over its rare-earth exports, preserving a key source of leverage in future negotiations.
The situation has left American businesses scrambling to find alternatives for the rare-earth metals, minerals and magnets they need to make their products. There's currently little evidence that China is removing its rare-earth export controls.
China has typically accounted for 80% of all rare-earth metals imported by the U.S., according to American government data. Globally, China is the world's largest producer of rare-earth metals, minerals and magnets, accounting for 70% of annual production, which is estimated at 210,000 tonnes a year.
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average MP price target of $29.14 implies 19.37% downside risk from current levels.
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