In August 2025, China's rare earth exports showed a significant trend of "decreasing volume and increasing prices," with export value soaring 51% month-over-month, reaching $55 million in a single month. This change signals a profound shift in China's rare earth strategy from simply "exporting resources" to "controlling value" and "setting rules."

In the global rare earth market, China is quietly reshaping pricing rules, leveraging its irreplaceable position in the supply chain and technological advantages. The export controls on medium and heavy rare earths in April 2025 were like a pebble dropped into a calm lake, triggering a chain reaction in the global market. European dysprosium prices soared 300% in just four weeks, and terbium oxide prices jumped from $965 per kilogram to $3,000. Behind these figures lies China's strategic upgrade from passive supply to active control of global rare earth pricing power.

01. Data Interpretation: The Divergence Between Export Volume and Price

In August 2025, China's rare earth exports showed a striking "quantity-price divergence." According to statistics from the General Administration of Customs, while the volume of rare earth exports that month decreased by 3.4% month-on-month, the export value jumped from $36.4 million in July to $55 million, a 51% month-on-month increase.

This divergence is not accidental but the inevitable result of policy adjustments. In April 2025, China implemented export controls on medium and heavy rare earths, subjecting imported ores to total volume control and establishing a full-process traceability system. This policy directly tightened rare earth supply, while global demand remained unchanged, pushing up prices.

The data reflects a shift in China's rare earth strategy. China is shifting from its previous extensive "volume-based" model to a more refined, "quality-based pricing" model. This shift has enabled China to achieve greater economic returns while reducing resource outflows.

02. Policy Regulation: Export Controls and Quota Management

China's rare earth policy reforms began with the implementation of export controls on medium and heavy rare earths in April 2025. This policy is more than a simple export restriction; it encompasses a sophisticated management system.

The new policy subjects imported ore (particularly Myanmar ore) to total volume control and establishes a full-process traceability system. This means that all rare earth raw materials entering China must be included in the national quota system. Every kilogram of rare earth oxide has a "digital ID," enabling full traceability from mining to final product.

Quota management has also become a key tool. China's rare earth export quota was reduced to 58,000 tons in 2025, a significant decrease compared to previous years. This tightened quota policy has created a tight balance between supply and demand, providing a foundation for price increases.

The combined effect of these policies was immediate. The price of dysprosium in the European market more than tripled from approximately $300 per kilogram in early April to $850 by May 1st; the price of terbium rose from $965 per kilogram to $3,000 per kilogram, an increase of over 210%.

03. Global Market: Supply-Demand Imbalance and Price Soar

China's adjustments to its rare earth policy have triggered a dramatic reaction in the global market, highlighting the severe imbalance in global rare earth supply and demand.

Rare earth prices have surged dramatically in the international market. The price of dysprosium in Europe reached $850 per kilogram (approximately 6.09 million yuan per ton), while the price in China was only 2.03 million yuan per ton, a threefold difference. The price of terbium in Europe reached $3,000 per kilogram (approximately 21.51 million yuan per ton), 2.4 times the price in China of 8.79 million yuan per ton.

This significant price gap has created arbitrage opportunities. In July 2025, a Japanese electronics company purchased Chinese praseodymium-neodymium oxide at a 16.7% premium of $680 per kilogram, directly driving up Chinese prices to as much as 500,000 yuan per ton.

Overseas buyers engaged in panic buying and stockpiling. China has implemented export controls on medium and heavy rare earths since April 2025, resulting in a significant premium to domestic prices overseas, further inflating price expectations.

04. Technological Advantage: Control of the Supply Chain and Refining Monopoly

China's pricing power in the rare earth sector stems not only from its resource reserves but also from its technological control over the entire supply chain and its refining monopoly.

China undertakes nearly 90% of the world's rare earth refining, a figure that demonstrates its absolute dominance in the rare earth supply chain. China controls 92.3% of the world's rare earth separation technology, a core technology that "turns stone into gold" and is now prohibited from export.

Even other countries that mine rare earths are forced to rely on Chinese technology and equipment. Raw materials from Mountain Pass, the largest rare earth mine in the United States, must be sent to China for processing, and Australia's Lynas relies on Chinese patents for its separation technology. Even raw ore from Vietnam's rare earth mines must be sent to China for purification and processing.

China Rare Earth Group has also achieved breakthroughs in mass production technology for ultra-high-purity rare earths (99.999%), breaking the monopoly of the United States and Japan. China's first intelligent demonstration line for rare earth disc motors has commenced production, opening up a new market for its rare earth permanent magnet axial flux motor, measuring only 6 mm thick.

05. Strategic Value: From Industrial Vitamins to Strategic Aces

Rare earths, known as "industrial vitamins," are essential core materials for modern high-tech industries and defense and military industries.

In the civilian sector, rare earths are key raw materials for products such as new energy vehicles, semiconductors, medical imaging chemicals, robotics, and offshore wind turbines. The addition of heavy rare earths such as dysprosium and terbium can significantly improve the coercivity and high-temperature resistance of neodymium iron boron magnets, enabling their use in high-temperature, high-stress environments.

Rare earth materials are crucial in the defense and military industries. The Center for Strategic and International Studies lists the F-35 fighter jet, Virginia- and Columbia-class submarines, Tomahawk missiles, radar systems, and "smart" bombs as weapon systems that rely on rare earth elements. An F-35 fighter jet requires over 900 pounds (0.41 tons) of rare earth elements, while a Virginia-class submarine requires over ten times that amount.

China's "controlled release" strategy for rare earths not only considers the impact on related industries in rare earth-dependent countries but also maintains its dominant position in the rare earth market.

06. Global Response: Countries' Responses and Alliances

Responses to China's rare earth policy adjustments have varied, but the consensus is that they are in a difficult position.

The United States urgently restarted its Mountain Pass mine, aiming for rare earth production to reach 45,000 tons by 2024, accounting for 11.5% of global production. The US Department of Defense also signed an agreement with MP Materials, the world's largest rare earth miner, setting a minimum purchase price of $110 per kilogram (approximately RMB 785 per kilogram) for praseodymium and neodymium in 2025, significantly higher than China's offer of RMB 685 per kilogram.

Australia's Lynas Corporation became the first company outside of China to commercially produce heavy rare earths, accounting for 12% of global supply. Vietnam's rare earth production in 2024 was expected to reach 31,000 tons, representing 7.9% of global production.

The EU and Japan are attempting to collaborate to de-China their rare earth supply chains, but are facing a bottleneck: insufficient scale. Sumitomo Metal's small separation plants, operating independently, have costs 60% higher than those in China. The EU's "European Rare Earth Alliance" plans to produce only one-fifth of China's capacity, yet it will cost over 10 billion euros.

These attempts face numerous obstacles. The West lacks rare earth refining technology, faces high environmental costs, and lacks economies of scale, making it difficult to compete with China.

07. Future Trends: Price Trends and Market Structure

Rare earth prices have entered a sensitive period of negotiation, facing multiple factors in the medium and long term.

In the short term, if Myanmar mine shipments do not resume, neodymium oxide prices could reach 700,000 yuan/ton; if an additional 3,000 tons of reserves are secured, market liquidity will completely dry up. Dysprosium oxide prices could break through 1.65 million yuan/ton in the short term, while dysprosium metal is expected to reach 2.1 million yuan/ton.

In the medium and long term, China faces the dual impacts of technological substitution and the circular economy. Japan's Sumitomo iron-based magnets have 80% the performance of neodymium iron boron, and mass production in 2026 could reduce demand by 20%. EU legislation mandates a rare earth recycling rate exceeding 50% by 2030.

However, emerging demand continues to expand. Tesla's ramp-up of one million units will account for 25% of global neodymium production, potentially widening the supply-demand gap to 1,525 tons. Humanoid robots (each weighing over 2kg) and the low-altitude economy (drones/eVTOL) provide long-term demand support.

The future market landscape will become even more complex. China will continue to promote the healthy and orderly development of rare earth trade by strengthening cooperation and communication with other countries, while safeguarding its own interests.

The phenomenon of "decreasing volume and increasing prices" in China's rare earth exports signals a profound shift in China's role in the global rare earth market: from a passive resource supplier to an active value controller and rule-maker.

Through policy adjustments, technological advantages, and strategic planning, China has not only increased the export value of rare earth products but, more importantly, reshaped global rare earth pricing rules. This shift not only brings economic benefits but also strengthens China's voice in high-tech industries and strategic resources.

In the future, as global demand for rare earths continues to grow and the international political and economic landscape evolves, China's rare earth policy will continue to strike a balance between resource conservation and the stability of the global supply chain. However, one thing is certain: China has already secured a favorable position and seized the initiative in this rare earths game.