Amid sustained growth in demand for rare earth elements across electric vehicles, medical equipment, and defense applications—compounded by China's tightened export controls—prices for multiple critical rare earth minerals have reached unprecedented levels in recent weeks. Experts predict these prices will likely remain volatile at elevated levels.

Data released by the media division of Argus, an international energy and commodity price assessment agency, shows that in the European market, dysprosium prices have risen to $960 per kilogram, while terbium prices stand at $4,000 per kilogram.

According to a February 7 report by Nikkei Asia, magnets made from these two rare earth elements are crucial for the drive motors of electric and hybrid vehicles. Their prices have hit record highs for two consecutive weeks since records began in 2015.

International dysprosium price trend, with China's export prices increasingly diverging from global levels

International terbium price trend

Yttrium, a key element in high-temperature superconductors, is used in medical equipment and light-emitting diodes. As of February 5, its price surged significantly from $260 per kilogram at the end of December to $425 per kilogram.

Gallium metal is a critical component in defense equipment such as radar systems and missile guidance heads. On February 5, its transaction price reached $1,600 per kilogram, hitting a new high since early January.

Nikkei Asia reported that a source from a trading company stated: “Following China's recent tightening of controls on exports to Japan, some companies appear to be accelerating inventory stockpiling and securing supplies.”

Global defense spending growth is also driving the market. Maeve Flaherty, a senior rare earths reporter at Argus, noted that demand for yttrium remains particularly strong in defense and electronics sectors, with supply constraints continuing to push prices higher.

Yoshikiyo Shimamine, a senior researcher at Dai-ichi Life Research Institute, predicted: “In the short term, rare earth prices are likely to remain volatile at elevated levels.”

Rare earth elements encompass 17 metallic elements. Renowned as the “industrial vitamins” for their unique optical, magnetic, and chemical properties, they are indispensable strategic resources in modern industry, widely used in new energy, new materials, aerospace, electronics, and military applications. China produces the vast majority of the world's rare earths.

Japan currently relies on China for over 70% of its rare earth imports. Following China's recent announcement banning exports to Japan of dual-use items potentially applicable for military purposes, Japan's “rare earth anxiety” has intensified.

According to Kyodo News, Japan's Japan Agency for Marine-Earth Science and Technology announced on February 2 that the deep-sea exploration vessel “Chikyu” successfully extracted rare earth-containing sediment from a seabed approximately 5,600 meters deep near Minamitorishima.

Public opinion widely views this seabed mining of rare earth-bearing sediment as Japan's attempt to break free from its reliance on Chinese rare earths. However, this development remains far from enabling Japan's domestic rare earth industry to achieve industrial-scale production and supply, making it difficult to meet domestic demand for an extended period.

The Nikkei newspaper noted that the technology for extracting rare earths from marine sediment is still in the basic research stage, requiring significant improvements to achieve mass production. Additionally, seabed mining entails high costs. Data from the Dai-ichi Life Research Institute indicates that extracting rare earth sludge near Minamitorishima costs several to dozens of times more than the market price of Chinese rare earths.

China has spent decades building an extensive rare earth industrial chain, accumulating deep technological expertise and achieving exceptional cost-performance ratios—achievements that cannot be replicated overnight. Given the extreme concentration of global rare earth refining and processing capabilities in China, even if Japan successfully extracts raw materials, it would remain highly dependent on external processing systems.

On February 3, when responding to a question from a Japanese television reporter, Foreign Ministry spokesperson Lin Jian stated: “We have noted that such reports have been circulating within Japan in recent years.”

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