China announced it has issued rare earth export licenses to certain companies. The exact number of licenses granted remains unspecified, and it is unclear if US firms received any.

The Chinese commerce ministry confirmed the approval of “a certain number” of applications in the latest batch. They emphasised that China will continue to enhance its approval process for compliant applications and is open to communication with other countries on export controls.

Beijing Resumes Issuing Licenses

The recent announcement signals that Beijing has resumed issuing rare earth export licences selectively, following a period marked by tighter scrutiny and withheld approvals. While they have not clarified the volume or details of the approvals, the vague language surrounding both the recipients and the scope of exports implies a cautious re-opening rather than a broad policy shift. The absence of clarity around whether licences were extended to American entities leaves questions regarding the direction of trade diplomacy and signals a measured approach rather than a broad relaxation of existing limits.

The commerce ministry’s overture that China remains open to dialogue must not be taken as a gesture towards swift regulatory easing. Rather, it should be viewed as part of an ongoing strategy to assert stewardship over its rare earth production and global distribution networks. By stating an intention to “enhance” the licence approval process, regulators are signalling an effort to reinforce compliance with domestic standards and more selectively screen export channels based on political and supply chain considerations.

From a practical standpoint, we interpret this as an indication that material originating from Chinese producers is becoming accessible under tightly monitored conditions, though only to parties deemed acceptable under state guidelines. It is not a broad re-opening, and any previous hope of uniform trade normalisation should be set aside, at least until we see more evidence of consistency in future licensing batches.

Market Reactions and Strategies

For our positioning over the next several weeks, we expect tighter spreads and narrower opportunities in rare earth-linked contracts where uncertainty around Chinese supply previously contributed to wider intraday volatility. That said, any additional opaque communication out of Beijing or noticeable absence of US-linked offtake deals could again impact forward pricing. Given the unpredictable timing of such updates, it would be unwise to lean heavily on anticipated easing in position-building, especially on the longer end of the curve.

Instead, a more balanced short-to-medium strategy is preferable, holding optionality where possible, particularly for instruments sensitive to Asia-Pacific raw material supply flows. Some reweighting toward producers outside mainland China also appears justified, especially where supply substitution remains resilient. Monitoring transaction-level disclosures in customs data might yield better clues than official statements, which are likely to remain broad in language and limited in frequency.

Jiang’s department’s inclination to modify the framework on an ongoing basis means pricing around policy shifts could remain erratic. There tends to be little advance notice or structured communication—normal forms of transparency should not be expected. As always, horizon-dependent trade structures—with possible early unwind if momentum shifts—offer greater resilience than deeper directional exposure.

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