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Investing.com -- Shares of MP Materials (NYSE: MP) and USA Rare Earth (Nasdaq: USAR) experienced significant gains in pre-market trading, rising 16% and 19% respectively, following China’s announcement of export restrictions on some rare earth elements.
The sharp increase in stock value comes in response to a move by China on Friday to place export controls on seven categories of medium and heavy rare earths, which include elements such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These materials are essential for various high-tech industries, from defense to electronics and electric vehicles.
China’s decision to restrict exports is a part of its broader reaction to tariffs imposed by President Donald Trump and could potentially sever the U.S. from crucial resources necessary for numerous modern technologies. Given that China is responsible for roughly 90% of the world’s refined rare earth production, and the U.S. heavily relies on imports for these materials—primarily from China—the news has triggered a significant market reaction.
The export control list, which will come into effect on April 4, applies globally, not just to the U.S., underscoring China’s capacity to leverage its dominant position in the mining and processing of these indispensable minerals.
This strategic move by Beijing, which has previously banned exports of three metals to the U.S. and imposed controls on others, is expected to accelerate Western efforts to establish alternative supply chains.
As the trading session progresses, investors are closely monitoring the implications of China’s export restrictions and the potential for MP Materials and USA Rare Earth to benefit from the increased urgency to secure alternative sources of rare earth elements.
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