China's Rare Earth Export Controls Continue to Tighten, Japan's Supply Chain Pressure Extends into May
Alina Collins
Chinese exports of three key heavy rare earths to Japan have been at zero for months running. Japan — the largest rare-earth magnet producer outside China — is now racing to build alternatives, with Shin-Etsu announcing its first new refinery in 17 years.
What does "zero exports" actually mean?
China's May customs data show terbium oxide and dysprosium oxide shipments to Japan have been at zero since last November. Yttrium oxide has seen only trace volumes since December.
All three are heavy rare earths — a subset rarer and harder to substitute than common rare earths — used widely in high-performance magnets, specialty alloys, and coatings.
This means → it is not a reduction in supply — it is a complete cutoff. Japan's magnet factories are drawing down stockpiles with no replenishment.
How did the controls escalate step by step?
In April 2025, China imposed export controls on select heavy rare earths and rare-earth magnets — the starting point.
In January, Beijing openly tightened restrictions on exports to Japan, then escalated twice more within a single month, hitting major Japanese conglomerates.
The backdrop: Prime Minister Takaichi Sanae's remarks on Taiwan last November, which visibly strained China-Japan diplomatic ties.
In plain terms = the controls were not a one-off action but a rolling escalation over half a year — each round wider than the last.
How is Japan responding?
Rare-earth magnet maker Shin-Etsu Chemical announced plans to build its first new rare-earth refining facility since 2008, aiming to cut dependence on Chinese supply.
This reflects a shift in Japan's industrial posture — from "wait for relations to improve" to "build our own supply chain." That is a qualitative change.
But a refinery takes years from planning to production. In the near term, Japan still has no alternative source.
What do the latest magnet and gallium export numbers tell us?
China's May rare-earth magnet exports fell 35% month-on-month, dropping to the lowest level since the same period last year. Prior months had stayed near historical norms.
This means → the controls are transmitting from raw materials to finished products — magnet exports are now contracting too.
On gallium — another critical metal — Japan received its first large-scale Chinese shipment since last December, offering brief relief. But Japan is the world's largest gallium consumer outside China; a single shipment does not change the long-term dependency.
Content is for reference only, not financial advice.