China curbs send Japan rare earth imports plunging

2026-08-14

Imports plunge

China's export restrictions have made it harder to secure rare earths for electric vehicles and semiconductor manufacturing equipment. Imports in the six months from January 2026 fell to about 20% of the level in the same period in 2024, before the curbs. Sourcing from outside China, including from Vietnam and the United States, has not advanced enough, and if the restrictions drag on, Japanese companies are likely to see an impact on production.

Based on Ministry of Finance trade statistics, two rare earth products were examined: dysprosium iron alloy, used in motor magnets for EVs and hybrid vehicles, and yttrium oxide, used in coatings for semiconductor manufacturing equipment parts.

Imports of dysprosium iron alloy in January-June 2026 totaled 13 tons, down 82% from January-June 2024. There were no imports from China in January, February, May and June 2026, deepening the decline. Yttrium oxide imports totaled 204 tons, down 74% on the same basis.

China accounts for 70% of global rare earth mining and more than 90% of the world's output of rare earths used in magnets. Backed by that supply strength, it has been stepping up pressure on other countries.

In April 2025, China's Ministry of Commerce restricted exports of seven types of rare earths, including dysprosium and yttrium. In February 2026, under dual-use controls, it added 20 Japanese companies and organizations to its export control list for critical minerals, and at the end of June it added 20 more companies and organizations.

Alternative sourcing limited

Japan is rushing to secure suppliers other than China and is advancing resource development and recycling networks outside the country. In January-June 2026, it imported yttrium from 12 countries and regions, including the United States and Australia. That was a sharp expansion from three countries and regions in January-June 2024, but volumes remain insufficient. There were also imports of dysprosium from Vietnam, but not enough to secure the required amount.

In late June, Prime Minister Sanae Takaichi instructed the government to begin an industrial-scale demonstration in 2027 for a seabed rare earth development project off Minamitorishima in the Ogasawara Islands. Sojitz is also seeking to develop new mines in Southeast Asia together with Australian resources giant Lynas. Even so, for the immediate term, the reality is that Japan must rely on a resumption of exports from China.

Impact begins to spread

The risks of reliance on China became apparent after the 2010 collision between a fishing boat and Japanese Coast Guard vessels near the Senkaku Islands. In 2012, when Japan-China relations deteriorated, imports from China fell sharply. This time, the drop is even steeper.

The lowest level of yttrium imports from China after the Senkaku dispute was 235 tons in January-June 2013. The 204 tons imported in January-June 2026 fell below that and are at a record low.

The impact has started to reach Japanese companies. Mitsui Kinzoku opened a sales base handling rare earths in Liaoning province in northeastern China in April 2026, but President Shinsuke Ike says closure could become an option if current conditions persist or worsen. The company had planned to manufacture rare earths for semiconductor manufacturing equipment, mainly using yttrium, at its plant in Fukuoka prefecture and sell them in China, but it says securing raw materials is difficult and it has no spare capacity to divert output to exports.

Proterial, a major rare earth magnet maker formerly known as Hitachi Metals, has also seen imports of dysprosium and other materials from China stop. It had been able to obtain export permits for some shipments through November 2025, but as of July no permits had been granted at all.

With alternative sourcing not progressing, many companies appear to be maintaining supply to major customers by drawing down inventories. An official at a major materials company said the halt in imports from China has created a very severe situation. AGC uses yttrium in coatings that improve the durability of components for semiconductor manufacturing equipment, but says there is currently no impact on production. It plans to assess the performance of substitute materials as it seeks to source from outside China.

An improvement in Japan-China relations also looks difficult to foresee. In May, Chinese authorities detained two Japanese employees of the Fuji Electric group in Dalian, Liaoning province, and arrested them in June. Details have not been disclosed, but they are believed to be suspected of improperly exporting rare earth magnets subject to dual-use controls. A semiconductor equipment maker said there are no major bottlenecks in production at present. However, inventories at major materials and nonferrous metals companies are limited, and if export restrictions drag on, an impact on key domestic manufacturers will be unavoidable.

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