Rare Earth Stocks Fall in Asia After U.S.-China Extend Trade Truce

Shares of Asian rare earth producers fell on Thursday after the United States and China extended a trade truce, reducing near-term investor concerns about potential export restrictions on the critical minerals.

Truce Extended to January

The market reaction followed an announcement from U.S. Treasury Secretary Scott Bessent that Washington and Beijing had agreed to extend the so-called Busan Agreement. The truce, which includes measures affecting critical minerals, will now expire on January 10, pushed back from its original November 10 deadline.

According to the Treasury Secretary, the extension is intended to provide more time for negotiators to work on a broader economic agreement. The original agreement saw China temporarily suspend certain rare-earth export controls, a key point of contention in trade relations.

Impact on Producers

The de-escalation in trade tensions prompted a sell-off in the sector, as the immediate risk of a supply shock that could drive up mineral prices subsided. Key stock movements included:

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• Shenghe Resources: fell 2.1%
• China Northern Rare Earth Hi-Tech: lost 1.1%
• China Rare Earth Nonferrous Metals: declined 1.1%
• Lynas Rare Earths (Australia): dropped 2%
• Iluka Resources (Australia): fell 0.5%

For investors, the extension lowers the geopolitical risk premium that was priced into these stocks. An escalation of tariffs or export bans would likely benefit producers through higher commodity prices, but the truce makes that scenario less probable in the short term.

Underlying Supply Tensions Remain

While the extension provides temporary stability, it does not resolve the fundamental disagreements over the supply of rare earths. U.S. officials have expressed concern over the pace of Chinese shipments, with Reuters reporting last week that China was lagging on some delivery commitments.

China's dominant position in the market—controlling up to 70% of global mining and around 85% of refining capacity—makes the sector highly sensitive to geopolitical developments. Chinese customs data cited by the Financial Times also showed that shipments of Chinese rare-earth magnets to the U.S. fell 20% month-on-month in August, highlighting ongoing friction.