Fresh customs data has reinforced the tight supply-demand balance in the global rare earth market. According to figures released by the General Administration of Customs on August 20, China's rare earth permanent magnet exports in July totaled 5,375 tonnes, down 4% month-on-month and 3.6% year-on-year. Shipments to Japan were particularly weak at just 111.4 tonnes, marking the fifth consecutive month below the 200-tonne threshold and hitting a near one-year low.
Despite the shrinking export volumes, rare earth product prices have moved higher against the trend. The average export price of rare earth permanent magnets climbed to $60.4 per kilogram in July, setting a fresh three-year high and highlighting a classic "lower volume, higher price" dynamic in the sector. As a core strategic raw material that is indispensable for emerging industries such as new energy, high-end manufacturing, and humanoid robotics, rare earths hold an irreplaceable position in the industrial chain and remain a critical bottleneck for overseas high-end manufacturing supply chains.
Several overseas institutions have assessed the potential impact of rare earth supply constraints on foreign economies. Daiwa Institute of Research, for instance, estimated that a prolonged disruption of Chinese rare earth imports could shave 1.3% to 3.2% off Japan's GDP and eliminate between 900,000 and 2.16 million jobs. These figures underscore the global market's heavy reliance on China's rare earth industry chain and highlight the strategic scarcity of the resource.
The underlying cause of the global supply-demand imbalance lies in China's dominant position across the rare earth value chain. According to IEA data, China accounted for 60% of global magnetic rare earth mining output in 2024, 91% of refining capacity, and as much as 94% of magnet production, giving it a formidable competitive moat. On top of this structural advantage, Beijing has continued to roll out industry controls: the State Council issued the Implementation Regulations for the Mineral Resources Law of the People's Republic of China on May 20, 2026, and the Ministry of Commerce further refined rules on handling reports of violations related to export controls on strategic minerals and dual-use items on June 24. These policy measures, combined with insufficient stability and limited incremental output from overseas rare earth producers, are steadily compressing global effective supply and are expected to reinforce the rigidity of industry supply.
The improving fundamentals of the rare earth sector are also showing up in corporate earnings. A leading domestic rare earth company disclosed its 2026 interim results on the evening of August 19, posting first-half revenue of RMB 25.799 billion, up 36.75% year-on-year, and net profit attributable to shareholders of RMB 2.053 billion, a sharp 120.46% increase from the prior year, placing both revenue and profitability among the top of the industry. With supply rigidity becoming more pronounced and downstream demand from emerging sectors continuing to expand, the investment appeal of the rare earth segment is rising, and market capital is increasingly positioning itself in the space.
The first rare earth industry theme ETF on the market, Rare Earth ETF Huatai-PineBridge (516780), has seen trading activity heat up recently. On August 21, its single-day turnover surpassed RMB 200 million, the highest level in the past ten trading days. Since the start of August, the fund has recorded net inflows on nine trading days, accumulating RMB 155 million in fresh capital. With continued inflows, the fund's latest scale has reached RMB 2.076 billion, with fund units at 2.431 billion, and unit growth exceeding 65% year-to-date, giving it a notable edge in both scale and liquidity.
The CSI Rare Earth Industry Index, which the ETF tracks closely, selects listed companies engaged in rare earth mining, processing, trading, and application businesses as its sample to reflect the overall performance of rare earth industry stocks. Its top five constituent holdings are China Northern Rare Earth, Baotou Steel, Aluminum Corp of China, China Rare Earth, and GEM Co, all competitive leaders in their respective fields. The product's 2025 annual report shows that as of December 31, 2025, the ETF had 60,300 holders, making it the only rare earth theme ETF in the entire market with more than 50,000 holders during that period.
The fund manager behind Rare Earth ETF Huatai-PineBridge (516780) and its feeder funds (A-share class 014331, C-share class 014332) is Huatai-PineBridge Fund, one of China's first ETF managers with over 19 years of experience in index investing. The firm has built a lineup of transparent, cost-efficient, and easily tradable index tools, including CSI 300 ETF Huatai-PineBridge (510300) and A500 ETF Huatai-PineBridge (563360). As of June 30, 2026, the company's ETF products have generated cumulative profits of more than RMB 180.6 billion for holders over the past two years, making it one of only three public fund firms in the A-share market to surpass RMB 160 billion in cumulative earnings during that period.
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