China’s temporary export‑licensing pause eases some dual‑use pressure — HREE supply risk remains through 2026

Key takeaways

• MOFCOM Announcements No. 70 and No. 72 (Nov 7 & 9, 2025) paused enhanced export controls for certain dual‑use items until Nov 27, 2026, reverting them to standard licensing for selected firms.
• Heavy rare earth elements (HREEs — the group of higher‑atomic‑weight rare earths such as dysprosium and terbium) remain constrained: dysprosium oxide jumped 8.2% WoW to $285/kg in Shanghai while December 2025 export tonnage (4,392 mt) was ~15.8% below the 2025 monthly average (5,215 mt).
• Non‑Chinese project delays and permitting issues mean new HREE processing capacity is unlikely to alleviate shortages before late 2026–2027.
• Compliance burdens shift rather than disappear: streamlined paths shorten timelines for pre‑qualified firms but raise counterparty and end‑use diligence for buyers and processors.

Executive summary

We at Materials Dispatch assess that China’s November 2025 MOFCOM notices provide targeted, tactical relief to select parts of the supply chain — notably gallium and certain oxide streams used in semiconductors and battery anodes — by returning them to standard licensing until Nov 27, 2026. However, the April 2025 controls on a subset of heavy rare earth elements (HREEs) remain in force. Market and trade indicators show that the licensing change has not translated into broad immediate relief for HREEs: spot prices and export volumes indicate continued tightness that will sustain procurement and national‑security risks for magnet‑dependent sectors.

What changed — the licensing shift and practical effects

The Ministry of Commerce of the People’s Republic of China (MOFCOM) issued Announcements No. 70 and No. 72 on Nov 7 and Nov 9, 2025. These notices pause enhanced export controls for a subset of dual‑use items and create a more streamlined licensing path for pre‑qualified exporters through Nov 27, 2026. Practically, exporters of items such as gallium and some graphite/oxide intermediates face fewer immediate paperwork and review steps, shortening lead times for approved counterparties.

Crucially, the April 2025 measures that tightened controls on seven HREEs — including dysprosium and terbium — were not reversed. Rather than a wholesale reopening, MOFCOM’s selective approach effectively concentrates legal flows to a narrower pool of buyers and jurisdictions that secure the required general licences.

Price and flow signals — why HREEs decoupled from the licensing move

Market behaviour underscores the distinction between licensing policy and physical availability. Dysprosium oxide rose 8.2% week‑on‑week to $285/kg in Shanghai, and terbium remained elevated amid thin trade volumes. Meanwhile, December 2025 export tonnage for the relevant category recorded about 4,392 mt, roughly 15.8% below the 2025 monthly average of 5,215 mt — a direct signal that export throughput stayed subdued despite eased licensing for other items.

By contrast, lighter rare earths such as NdPr (neodymium‑praseodymium metal/oxide used in many permanent magnets) showed milder movement, reflecting differentiated policy treatment and relatively larger available oxide inventories. For procurement teams, this divergence means price and sourcing strategies must be element‑specific rather than treating “rare earths” as a single homogeneous risk.

Operational pinch — why non‑Chinese capacity won’t immediately fill the gap

Projects outside China that could materially increase HREE availability continue to face timing and regulatory setbacks. Reported delays at Lynas’ Mount Weld separation upgrades and MP Materials’ Stage II logistics and commissioning push meaningful separated HREE output into late 2026 and beyond. U.S. and allied processing sites, including legacy facilities, are constrained by regulatory considerations (for example, handling of thorium‑bearing residues) and permitting timelines. Funding and permitting shortfalls cited by developers further slow projected ramp rates.

The net result is a multi‑year horizon to full diversification: policy easing in China can remove one layer of friction for some inputs, but it cannot substitute for on‑the‑ground separation and refining capacity that remains limited outside China.

Compliance and supply‑chain implications

The licensing pause shifts the nature of compliance work rather than eliminating it. Selective issuance of “general” export licences increases reliance on a smaller cohort of exporters; buyers must therefore conduct more exhaustive counterparty due diligence, verify end‑use documentation, and factor licence transferability into contract clauses. Parallel regulatory regimes — including tariff classifications, EU REACH considerations, and defence procurement rules — continue to shape routing and contractual risk allocation.

For industrial buyers (automotive, wind, electronics) and defence contractors, this environment raises operational questions: whether to hold larger inventory buffers, retry multi‑sourcing of oxides vs. finished magnets, or accelerate vertical integration to capture separation/refining margins and reduce exposure to licence concentration.

Signals to watch

• MOFCOM monthly license issuance and export data for HREE tonnages — recovery above historical monthly averages would indicate easing; persistent sub‑average flows imply continued tightness.
• Progress updates from Lynas and MP Materials on separation circuit commissioning dates and throughput as indicators of non‑Chinese supply timing.
• Spot market volumes in Shanghai Metals Market and FastMarkets for dysprosium and terbium — falling trade depth alongside rising prices signals real physical scarcity.
• Regulatory and permitting reports from U.S./Australian processing nodes (including residue and waste‑stream restrictions) that affect ramp timing.

Materials Dispatch view

MOFCOM’s pause provides short‑term relief for selected dual‑use inputs but does not remove structural supply risks for heavy rare earths. Elevated dysprosium pricing, sub‑average export tonnages, and delayed non‑Chinese capacity additions mean HREEs will remain a chokepoint for high‑performance magnets and defence supply chains through 2026 and likely into 2027.

Conclusion

In sum, the licensing change narrows near‑term disruption for specific dual‑use materials but does not resolve the core imbalance in separated HREE availability. Market participants should treat the policy pause as a partial operational reprieve rather than a strategic solution: plan for continued price and allocation risk, reinforce counterparty due diligence, and track non‑Chinese processing milestones closely.