China's Export Controls Slash Japan's Rare Earth Imports by 80%, Pressuring EV and Chip Equipment Supply Chains
Nashnova编辑部
Japan's imports of two critical rare earths fell roughly 80% year-on-year in H1 2026, forcing manufacturers to draw down inventories; prolonged controls threaten real disruption to EV motor and chip-equipment supply chains.
How far have imports actually fallen?
Dysprosium — a core material for EV motor magnets — totalled just 13 tonnes in H1, down 82% YoY. Imports hit zero in January, February, May, and June.
Yttrium oxide — used in durable coatings for chip-equipment parts — came in at 204 tonnes, down 74% YoY, an all-time H1 low. The previous record was 235 tonnes in H1 2013, during the Senkaku/Diaoyu supply crisis.
This means → imports have not merely declined — they are approaching total cutoff, and companies are surviving on stockpiles alone.
Why does China hold this much leverage?
China accounts for roughly 70% of global rare-earth mining and over 90% of magnet-grade rare-earth processing.
In April 2025 Beijing placed export controls on seven categories of rare earths, including dysprosium and yttrium. From February 2026 it restricted dual-use exports to 20 Japanese firms and institutions; in late June it added 20 more.
In plain terms = China dominates every link from ore to finished magnet. Each new round of controls tightens the grip, and Japan has almost no bargaining leverage.
What is happening on the factory floor?
Rare-earth magnet maker Proterial says dysprosium imports from China have effectively ceased. Export licences previously granted all expired by July with none renewed.
Mitsui Mining & Smelting opened a rare-earth sales office in Liaoning, China, in April — but its president said "closing the office is also an option" if conditions persist or worsen.
Glass maker AGC uses yttrium oxide in coatings for chip-equipment parts. Production is not yet affected, but the company is evaluating non-Chinese alternatives.
This reflects a sector-wide "inventory buffer" phase — output has not stopped, but the cushion is thinning.
Can alternative sources fill the gap?
In H1 2026 Japan imported yttrium oxide from 12 countries and regions, including the US and Australia. In H1 2024 there were only 3 alternative sources. Small volumes of dysprosium also appeared from Vietnam.
Yet total alternative supply falls far short of covering the shortfall.
This means → the supplier count quadrupled, but import volumes still collapsed by 70-plus percent — proof that alternative mines operate on an entirely different scale.
What are Japan's government and companies doing?
Prime Minister Sanae Takaichi directed agencies in June to begin preparations for a commercial-scale deep-sea rare-earth demonstration project near Minamitorishima, Japan's easternmost island, targeting a 2027 start.
Trading house Sojitz is working with Australia's Lynas Rare Earths to develop new mines in Southeast Asia.
In plain terms = deep-sea mining and overseas greenfield projects are long-lead bets — at least one to two years before any output, too slow to solve near-term inventory depletion.
What does this mean for investors?
A chip-equipment company representative said the rare-earth shortage "has not yet become a major production bottleneck," but as inventories deplete, substantive disruption is hard to avoid under prolonged controls.
This means → today's calm rests on stockpiles, not on restored supply. EV motor magnets and chip-equipment coatings are the two pressure points that will crack first — the former constrains vehicle output, the latter constrains semiconductor-equipment delivery.
This reflects a shift: China's rare-earth controls have moved from a "policy signal" phase into an "actual cutoff" phase, and supply-chain risk is transmitting from data to the production floor.
Content is for reference only, not financial advice.