In a notable shift, shipments of rare-earth magnets from China to the United States experienced an 11% decline in November compared to October, as indicated by customs data released on Saturday. The data revealed that the total amount of rare-earth magnets received by the US was 582 tons, down from 656 tons in the previous month.
This decrease in exports occurs despite a reported month-on-month increase in overall rare-earth sales, predominantly consisting of magnets. The fluctuating figures underscore the volatility that has characterized this particular trade route throughout the year.
Rare-earth magnets are essential components found in various applications, including electric vehicle (EV) motors, drones, and military systems. Throughout the year, Beijing has employed these magnets as a strategic tool in its trade relations. In April, the Chinese government implemented a tighter export-control system, which resulted in US-bound shipments plummeting to below 50 tons in May. Subsequent months saw a series of trade maneuvers, temporary agreements, and a gradual recovery in exports, before the latest setback in November.
In conjunction with these developments, China”s Commerce Ministry announced the approval of numerous general licenses intended to expedite rare-earth exports and reduce wait times for compliant companies. When questioned by Hong Kong reporters regarding claims that some approvals may have extended to European firms, a ministry spokesperson responded vaguely, confirming that applications had been approved without specifying any particular regions.
The spokesperson noted, “Some exporters have already preliminarily met the basic requirements for applying for a general license,” adding that multiple submissions from exporters have already been accepted and approved. The ministry emphasized that these licenses represent a new mechanism for exporters dealing with vital materials, including magnets, which have long been a dominant segment in the rare-earth category. Additionally, traders anticipate that this new permit process could alleviate some delays, contingent upon how many companies fulfill the eligibility criteria.
Amidst these trade dynamics, China”s central bank is expected to maintain its benchmark lending rates stable for the seventh consecutive month in December. A Reuters survey indicated that all 25 respondents forecasted the one-year loan prime rate to remain at 3.0% and the five-year rate at 3.5%. This follows the central bank”s decision to keep its seven-day reverse repo rate at 1.4%, a move designed to support loan prime rate levels.
Factory output and retail sales in China showed signs of slowdown in November, likely influenced by the ongoing property market slump, affecting overall demand. Despite a trade surplus exceeding $1 trillion recorded in the first eleven months of 2025, exporters are bracing for a challenging year ahead as trade tensions escalate.
A trader from a Shanghai bank highlighted that banks are currently facing historically low net interest margins of 1.42%, cautioning that a reduction in the loan prime rate could complicate mortgage rates early next year, thereby impacting banks adversely. Economists suggest that policymakers perceive no pressing need to cut rates in December as China remains on track to achieve its growth target of 5% for 2025. Analysts from Citi predict that easing measures may commence in January 2026, with ING forecasting potential support in the early part of the year.
China Post Securities mentioned that officials might contemplate a 20-basis-point interest rate cut in the first half of 2026, while Citic Futures anticipates reductions in the range of 10-20 basis points throughout 2026.
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