Beijing warns against foreign stockpiling of REEs
Beijing is warning foreign buyers against trying to stockpile rare earth element (REE) supplies.
On August 14, FT reported that Chinese officials are:
- "Telling companies they cannot go out and build huge inventories in rare earths, or they will face shortages"
Some context: Until recently, most firms followed a “just-in-time” approach to rare earth procurement – keeping inventories lean to cut storage costs on what had long been stable supplies.
More context: In April, however, Beijing slapped export license requirements on seven (of seventeen) REEs in response to US "Liberation Day" tariffs – then launched an anti-smuggling crackdown the following month that continues to create delays.
- Amid all the uncertainty, many companies now desperately want bigger buffers.
But Beijing's having none of it.
- Indeed, we've heard for months that the Ministry of Commerce (MofCom) – responsible for license reviews – is only approving enough exports to meet short-term demand.
Get smart: It's unclear how MofCom determines "acceptable" export volumes under each license.
- But that opacity itself will discourage firms from asking for more than they can promptly use.
Get smarter: Beijing's control over REE exports is a critical point of trade leverage.
- Officials will be keeping buyers on a short leash for the foreseeable future.