China's Grip on Rare Earths Tightens as Antimony Playbook Spreads
A 22.5% drop in Chinese magnet exports to the US shows Beijing repeating the antimony squeeze, and the only non-Chinese heavy-rare-earth plant is 80% locked up.
China's rare earth magnet exports to the United States fell 22.5% year-over-year in the first two months of 2026, even as overall Chinese magnet exports rose5. That divergence is the tell. Beijing is not restricting supply broadly; it is restricting supply to one buyer.
It echoes what happened with antimony. In August 2024, China announced export controls on the metal, used in more than 200 types of military munitions. Within weeks the price ran from $1,400 per ton to $38,000, a 2,600% move, and shipments to the United States collapsed 97%5. Anyone watching that sequence and not stress-testing rare earths was not paying attention.
The current magnet numbers are smaller in magnitude but sit in a more sensitive supply chain. Terbium, one of the two heavy rare earths at the core of military-grade magnets, is up 103% this year5. That is a real cost escalation inside defence platforms and advanced manufacturing, not a paper move.
The strategic bind is the processing bottleneck. One company holds an exclusive 80% offtake from the only non-Chinese rare earth processing plant in North America capable of handling heavy rare earths5. The entire non-Chinese heavy rare earth processing capacity in North America runs through a single site under one contract.
The wider contest over order and alignment frames the stakes. Canada's prime minister, Mark Carney, released a national artificial intelligence strategy on Thursday (2026-06-04), treating AI as critical infrastructure on par with energy3. Middle powers are jockeying for sovereign capability in exactly the technologies that depend on secure material inputs. Ottawa's move is a sovereignty play. The rare earth squeeze gives it urgency.
This weighs on how Washington and Ottawa think about their defence industrial bases, which both countries are racing to rebuild on the premise that future conflicts hinge on more than raw military capability6. If the inputs are choked, the rebuild stalls.
The USMCA review adds a second front. On July 1 (2026-07-01), US, Mexican and Canadian officials met to discuss the agreement, now six years in force, with a mandatory review deciding whether it extends a further sixteen years7. Trade architecture and material security are now the same negotiation. A deal that hardens North American sourcing is worth more than a tariff schedule.
China's broader neighbourhood strategy cuts against the pressure it applies. The country has 14 land borders and a tumultuous neighbourhood, from North Korea to active conflicts, and if it wants to challenge American global leadership it will need regional backing2. Bullying suppliers and buyers alike has a cost in goodwill, particularly across a neighbourhood Beijing cannot afford to alienate.
There is also a capital-flow dimension that rarely makes the commodities pages. Chinese-built infrastructure is expanding physical control, as at Chancay, 65km north of Lima, where a $1.3bn first stage involving four quays is designed to extend land into deeper water1. Trade routes and processing capacity are being built by the same actors.
Against that, the multilateral institutions that might arbitrate are weaker. The United States has paid only $160 million of its assessed dues to the regular UN budget, leaving a shortfall of more than $4 billion4. A fiscal crisis at the UN is not a rare earth story directly. But it removes one venue where middle powers can push back collectively, which is precisely the role Canada is trying to claim on AI3.
For traders, the signal is in the magnet export line, not the headline price of terbium. Watch whether the 22.5% year-over-year decline5 widens in the next monthly print. A third consecutive divergence between total Chinese magnet exports and exports to the US would confirm a targeted policy, not a market accident. That is the number that matters for defence supply chains, and for anyone positioned in the processing bottleneck that runs through 80% offtake at a single North American plant5.