By Lewis Jackson
BEIJING (Reuters) – Shipments of seven rare earths placed on an export control list last week by Beijing have ground to halt, three sources said, raising the risk of shortages overseas as Chinese exporters begin the long, uncertain wait for government licenses.
Shipments stopped on April 4, the sources familiar with the matter said, when Beijing restricted the export of seven rare earths and related material used across the defense, energy and automotive industries as part of its retaliation against U.S. President Donald Trump’s tariff hikes on Chinese goods.
Exporters must now apply to the Ministry of Commerce for licenses, a relatively opaque process that can range from six or seven weeks to several months. Reuters reported last month there had been no antimony exports to European Union countries since China put the metal on a control list in September.
“When asked by my clients when their cargoes will be able to leave China, we give them an estimated time of 60 days but it may actually take longer than that,” said a China rare earth trader, who spoke on condition of anonymity given the topic’s sensitivity.
If the freeze lasted longer than two months, then the typical stockpiles built up by customers could deplete, they said, adding it could be especially difficult for U.S. clients to get export licenses given the escalating trade war between the superpowers.
China produces some 90% of the world’s rare earths and the export restrictions demonstrate how Beijing can weaponize that control to all but sever supply of the vital elements to users around the world.
However, the export controls are also likely to chip away at China’s dominance because they will force overseas buyers to accelerate their diversification away from China, even if that process is likely to be lengthy.
Several Chinese rare earth sellers have already declared force majeure on their contracts with overseas buyers, according to two analysts. Cargoes already at port waiting for shipment have been barred from leaving if they have not cleared customs, they added.
It is unclear how many cargoes scheduled for shipment have been affected.
China’s commerce ministry and customs department did not respond to faxed questions from Reuters outside of office hours.
(Reporting by Lewis Jackson in Beijing. Editing by Mark Potter)
Comments