Permanent magnets are essential strategic products for the production of electric motors, wind turbines and electronic components, thanks to their ability to generate a stable magnetic field that enables greater efficiency and power density. According to the IEA, they constitute the fastest-growing and strategically most important application of rare earths, representing approximately 95% of total rare earth consumption by value. The supply of permanent magnets is highly concentrated geographically.
China maintains a dominant position in the market, which has allowed it to use these products as an instrument of geopolitical and commercial pressure. The first restrictions were introduced in April 2025 in the context of the trade war with the United States through an export licensing system. Controls were further expanded in October 2025, but the new extension was suspended in November of the same year as part of the trade agreement reached between China and the United States.
In July 2026, China once again used export controls as a pressure tool, banning its operators from exporting dual-use goods, including rare earth permanent magnets, to 14 European companies, in response to the EU's 21st sanctions package against Russia, which also affected some Chinese companies. From a commercial perspective, 2025 data shows China's predominance in the supply of permanent magnets to both the European and global markets. China exported 31,000 tonnes of permanent magnets to Europe and 73,400 tonnes to non-EU countries, accounting for more than 70% of European supply and approximately 63% of supply destined for non-EU markets.
Japan is the second largest exporter worldwide with approximately 11,000 tonnes of permanent magnets exported, a volume almost ten times lower than that of China. Germany is the second largest supplier to the European market, with 3,600 tonnes of permanent magnets exported to the EU, equivalent to just over one-tenth of Chinese exports to the European market. From a price perspective, since the beginning of 2026, FOB prices in euros for Chinese permanent magnet exports have increased by more than 20% compared to January 2026 levels.
The increase in Chinese prices, which represent an international benchmark for permanent magnet prices, has progressively reflected in the European market as well. Between January and September 2026, European permanent magnet prices expressed in euros increased by more than 12%. The new restrictions introduced by China on exports of rare earth permanent magnets to some European companies could further intensify upward price pressures in the European market in the coming months.
Should these restrictions persist over time, the availability of permanent magnets in the European market could decrease significantly, increasing price pressure and accelerating further growth. Given the EU's strong dependence on permanent magnet imports, a block on Chinese exports could generate a significant supply shortage in the European market, with possible repercussions on availability and prices.
Source: pricepedia.it