China’s Rare Earth Exports Plunge. Was Export Quota Secretly Cut?

China’s rare earths shipments fell in May as prices surged on signs of possible export controls on the minerals amid the escalating trade war with the U.S.

Exports declined to 3,640 tons last month, down 16% from April and an 18% drop from a year earlier, according to Chinese customs data on Monday. Shipments, which can be volatile month-to-month, were down 7.2% in the first five months of the year to 19,266 tons.

Chinese rare earths prices have surged since mid-May following a ban on imports from Myanmar and, separately, speculation that the minerals could be weaponized in the trade war. The rally has extended into June after China’s state planner announced it was studying proposals to establish export controls. The Asian nation is the world’s top producer of rare earths and the U.S. relies on it for about 80% of its imports.

Shipments fell after domestic prices surged, discouraging exports, following a ban on imports from Myanmar and tariff hikes on purchases from the U.S., according to Wu Xiaofeng, an analyst at SMM Information & Technology Co. President Xi Jinping’s visit to a local rare earths facility also fueled speculation that the government will bolster the domestic industry, boosting prices.