Rare earth imports and exports experience a 'polarization'

According to the latest data from the General Administration of Customs, China's rare earth exports in March 2025 reached 5,666 tons, a year-on-year increase of 20.3%. Cumulative exports in the first quarter reached 14,178 tons, a year-on-year increase of 5.1%. In stark contrast, March's rare earth imports were only 7,757 tons, a year-on-year plunge of 42.2%, with cumulative imports in the first quarter totaling 24,679 tons, a year-on-year decrease of 30.9%.

This phenomenon of "increased exports and decreased imports" reveals three major contradictions in the global rare earth supply chain:

Resource side: Political instability in Myanmar has led to a sharp reduction in imports of medium and heavy rare earths (imports from Myanmar in the first quarter decreased by more than 70% year-on-year), while alternative sources such as the United States and Laos have yet to fill the gap;

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Demand side: The expansion of the overseas new energy industry chain has boosted export demand, but domestic magnetic material companies are facing a "volume increase, price decrease" predicament due to the impact of trade wars (a 25% tariff imposed by the United States has led to a 19.3% decrease in export orders);

Policy side: China has strengthened export controls on medium and heavy rare earths, but the market-oriented pricing mechanism for light rare earths is yet to be improved, leading the industry into a predicament of "increased production but not increased income".

I. Technological Substitution: Reshaping Demand Structure and Re-evaluation of Light Rare Earths

Low-end substitution accelerates, light rare earths under pressure

The appliance and consumer electronics sectors are accelerating the promotion of cerium iron alloy technology, reducing the praseodymium addition ratio from 2.8% to 1.5%. The estimated replacement volume in 2025 is 35,000 tons, accounting for 12% of the total demand for light rare earths. Australia's ASM company has developed MagNex rare-earth-free permanent magnet technology with a magnetic energy product exceeding 20 MGOe, and the cost is only 1/5 of neodymium iron boron, with a substitution rate exceeding 10% in the low-end motor field, further squeezing the market space for light rare earths.

Technological barriers for medium and heavy rare earths are consolidated

Medium and heavy rare earths (such as dysprosium and terbium) remain irreplaceable in the military and new energy vehicle sectors due to their high temperature resistance and high magnetic energy product. China has reduced the dysprosium addition ratio from 2.5% to 1.8% through grain boundary diffusion technology. Tesla's Optimus second-generation motor uses holmium-dysprosium composite magnets, reducing costs by 18%, but core technology still relies on Chinese patents, making technological substitution much more difficult than for light rare earths.

High-end application moat

Northern Rare Earth and CNNC cooperate to develop nuclear-grade dysprosium alloy, securing orders for control rods in fourth-generation nuclear power plants (5-8 tons per unit). Baogang Rare Earth silicon steel material has achieved efficiency improvement and noise reduction in high-speed rail motor tests, with the proportion of high-end orders increasing to 26.2%, building a long-term competitive advantage through technological barriers.

II. International Competition: The Dilemma of "De-Sinicization" of the Global Rare Earth Supply Chain

Limitations of the US "second supply chain"

Exports from the Mountain Pass mine in the United States to China decreased by 23% year-on-year. Insufficient domestic refining capacity has led to delays in the delivery of military magnetic materials. The Pentagon has allocated $500 million to research cerium-cobalt magnets, but their performance is still 20% behind traditional products. Although companies such as Norway's REEtec and Germany's Vacuumschmelze are accelerating their deployment, the global non-Chinese rare earth refining capacity in 2025 still accounts for less than 15%.

​​ Southeast Asia's "OEM trap" and the emergence of African forces

Malaysia and Laos have become new sources of rare earth imports for China (imports from Laos in January-February 2025 increased by 164% year-on-year), but their refining technology relies on Chinese authorization. Malaysia has repeatedly requested relaxation of technology exports without success. The Kangankunde rare earth mine in Malawi, Africa, is expected to be put into operation in 2026, with an annual capacity of 15,323 tons and an operating cost of $2.92/kg, potentially becoming a new variable in the supply of medium and heavy rare earths.

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China's "technology + resources" dual lock strategy

China Rare Earth Group is investing in mines in Myanmar and Australia and plans to establish a 50,000-ton/year magnetic material production line in Southeast Asia to avoid export control risks. Northern Rare Earth has increased the gross profit margin of high-end neodymium iron boron to 22% through digital transformation and has secured supply chain ties with CATL and BYD, forming a closed loop of "resource control—technological barriers—market binding".

III. Future Outlook: Long-Term Confrontation between Technological Substitution and Policy Games

​​ Prices of light rare earths are likely to remain under pressure

The price of praseodymium may fall to the range of RMB 580,000-600,000/ton in the short term. We need to be vigilant against the accelerated substitution of cerium iron alloys and the risk of lower-than-expected wind power installation demand. Medium and heavy rare earths (dysprosium and terbium) will benefit from the supply risks in Myanmar and technological barriers, resulting in stronger price resilience, but we need to pay attention to the progress of new mines in Africa.

​​ The global struggle for pricing power of rare earths intensifies

China is strengthening its influence over medium and heavy rare earths through export controls, but the market-oriented pricing mechanism for light rare earths is still not well-established. The United States is working with its allies to promote the standardization of rare earth refining technology (such as the EU's proposed "Critical Raw Materials Act"), attempting to weaken China's patent advantage. The confrontation between the two sides may shift from resource competition to the establishment of technological rules.

Industry concentration accelerates

Small and medium-sized magnetic material factories are accelerating the process of clearing out due to capital chain pressure (capacity utilization rate has dropped from 85% to 65%), and the market share of Northern Rare Earth and China Rare Earth Group is expected to exceed 40%, with the industry shifting from "decentralized competition" to a new pattern of "oligopoly dominance + ecological synergy".