China Slashes Rare-Earth Exports to U.S. by 80% in May – MP, USAR, NEO in Focus

Beijing just pulled the plug on America's tech supply chain—hard. Rare-earth exports cratered 80% last month, and nobody's blinking.

Why it matters: These metals power everything from EVs to fighter jets. When China sneezes, Silicon Valley gets pneumonia.

The fallout: MP Materials (MP) and other rare-earth plays are now geopolitical poker chips. USAR and NEO investors? Buckle up.

Wall Street's take: 'Supply chain diversification'—that thing analysts have been paid millions to recommend since 2018—still isn't happening. Surprise.

Bottom line: In the tech cold war, minerals are the new bullets. And China's holding the ammo crate.

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The sharp decline in shipments to the U.S. is significant as rare-earth metals are critical components of technologies from smartphones to electric vehicles, as well as solar panels and military equipment such as fighter jets and missile systems.

Rare-earth metals have become a major point of contention between the U.S. and China in their ongoing trade dispute and tariffs between the two countries. Total export volumes of rare-earth magnets from China fell 80% in May from a year earlier, according to Chinese customs data. That was the biggest percentage decline on record.

Businesses Scramble

Publicly traded companies that are involved directly in the extraction and processing of rare-earth metals include MP Materials (MP), USA Rare Earth (USAR), and NEO Performance Materials (TSE:NEO). Despite a 90-day truce in its trade war with the U.S., China appears to be maintaining tight control over its rare-earth exports, preserving a key source of leverage in future negotiations.

The situation has left American businesses scrambling to find alternatives for the rare-earth metals, minerals and magnets they need to make their products. There’s currently little evidence that China is removing its newly imposed rare-earth export controls.

China has typically accounted for 80% of all rare-earth metals imported by the U.S., according to American government data. Globally, China is the world’s largest producer of rare-earth metals, minerals and magnets, accounting for 70% of annual production, which is estimated at 210,000 tonnes a year.

Is MP Stock a Buy?

The stock of MP Materials has a consensus Strong Buy rating among eight Wall Street analysts. That rating is based on seven Buy and one Hold recommendations issued in the last three months. The average MP price target of $29.14 implies 19.37% downside risk from current levels.