# US samarium costs rise 346-fold under China export controls
*A 90% Chinese monopoly over metal conversion capacity leaves Western defense contractors short of magnet alloy before a Pentagon procurement ban takes effect in 2027.*
**Published:** November 3, 2026
**By:** Wei Zhang
**Section:** Semiconductors & AI Hardware — China
**Format:** Why It Matters
**Confidence:** medium
**Source:** https://eastasiabrief.com/semiconductors/us-samarium-costs-rise-346-fold-under-china-export-1102
**Publisher:** East Asia Brief (https://eastasiabrief.com/)
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## What to know
- North American samarium trades at 346 times Chinese domestic prices on metallization bottleneck
- China controls over 90% of global rare-earth metal and alloy capacity
- Pentagon statutory ban on Chinese rare-earth magnets takes effect Jan. 1, 2027
*A worker inspects finished metal magnet components on a table inside an industrial processing facility. (AI-generated image)*
Investment bank Canaccord Genuity said Nov. 2, 2026, that North American spot prices for samarium had jumped to 346 times domestic Chinese levels because of worsening metal processing bottlenecks.
The pricing divide hits samarium-cobalt magnets used in precision-guided munitions and radar systems. Chinese refiners continue to supply domestic magnet manufacturers at fractionally lower prices.
Western spot markups have surged across other heavy rare earths. Dysprosium traded at $1,074 per kilogram in Rotterdam against $227 per kilogram in China, while yttrium changed hands at more than 100 times Chinese prices.
The price divergence stems from a global bottleneck in metal reduction and alloying. China controls more than 90% of the world's 210,000 tonnes of annual rare-earth metallization capacity.
Metallization reduces separated rare-earth oxides into refined metals before furnaces melt them into alloy strip. That cast alloy strip serves as the direct feedstock for permanent magnet manufacturing.
Lead times for strip-casting furnaces now stretch to two years, Canaccord Genuity said. Western processors cannot source key thermal conversion equipment quickly from domestic suppliers.
Chinese authorities have tightened customs restrictions on exports of rare-earth thermal processing machinery. That equipment barrier delays commissioning schedules at emerging Western reduction plants.
Permanent magnet fabrication capacity outside China will expand to 70,000 tonnes annually by 2030, according to industry estimates. That expansion represents more than three times current Western output.
However, non-Chinese metallization plants will supply only 38,000 tonnes of alloy over that span. That structural mismatch leaves Western magnet producers facing a 32,000-tonne raw metal deficit.
United States manufacturers purchase approximately 48,000 tonnes of rare-earth permanent magnets each year. Those magnets go into defense platforms, electric vehicle motors and aerospace electronics.
Domestic factories inside the United States produced roughly 300 tonnes of magnets in 2025. That localized production covered less than 1% of total American consumption.
Samarium-cobalt magnets are critical for military avionics because they retain magnetic strength up to 350 degrees Celsius. Standard neodymium magnets lose performance under heavy thermal stress.
Actuators in cruise missiles and fins on precision bombs rely entirely on samarium cores. Military contractors cannot substitute neodymium magnets without redesigning heat management in propulsion housings.
China's Ministry of Commerce instituted export licensing on April 4, 2025, under Announcement No. 18. That notice covered seven medium and heavy rare earths, including samarium and dysprosium.
The decree applied to pure metals, master alloys and sintered magnets. Exporters must secure individual permits from Beijing, a process that delays export deliveries by at least 45 days.
The commerce ministry expanded its oversight on Oct. 9, 2025, by publishing Announcement No. 61. That regulation imposed controls on foreign-made items containing Chinese-origin heavy rare earths above a 0.1% value threshold.
Beijing suspended those extraterritorial provisions for one year following bilateral trade negotiations. However, the direct export licensing requirements under Announcement No. 18 remained active.
The one-year suspension on Beijing's extraterritorial rule will expire on Nov. 10, 2026. The expiration could trigger compliance inspections on foreign defense contractors that use Chinese materials.
The United States Department of Defense established a 10-year procurement pact with MP Materials to protect domestic processing. The agreement guarantees a price floor of $110 per kilogram for neodymium-praseodymium.
MP Materials operates the Mountain Pass open pit mine in California, which produced 42,000 tonnes of concentrate in 2025. Mountain Pass deposits consist almost entirely of light rare earths, yielding very little samarium.
The Pentagon floor contract excludes samarium, leaving private investors without price protection against Chinese market discounting. As a result, commercial lenders have declined to fund dedicated Western samarium reduction plants.
Statutory purchasing rules will intensify the supply squeeze. Under the Defense Federal Acquisition Regulation Supplement, the Pentagon will ban Chinese-origin rare-earth magnets from military hardware starting Jan. 1, 2027.
Defense contractors unable to source qualified non-Chinese samarium-cobalt magnets must seek national security waivers. The Department of Defense has not issued formal criteria for granting those origin waivers.
The Canaccord Genuity report did not disclose the absolute dollar spot price per kilogram paid for North American samarium shipments. The investment bank has not published underlying physical invoice logs.
The United States Department of Defense will review strategic mineral stockpile levels on Nov. 18, 2026. The evaluation will determine defense contractor readiness ahead of the January procurement ban.
## Impact map
| Event | Korea | China | Japan | Global impact |
| --- | --- | --- | --- | --- |
| China heavy rare earth controls | Domestic magnet finishers face elevated feedstock costs for imported alloys | State refiners maintain 90% metallization dominance and domestic cost discount | Defense magnet fabricators deplete inventory buffers as licensing terms tighten | Western missile programs confront 32,000-tonne alloy deficit ahead of 2027 DoD ban |
## In this story
- **Companies:** MP Materials
- **Tickers:** MP
- **Policy:** Export Controls, Procurement Rules
- **Impact:** Supply Chain, Cost Structure, Pricing
## Primary sources
1. nai500.com
2. oilprice.com
3. gab.com
4. bsenergybrief.com
5. duramag.com
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Cite as: East Asia Brief, "US samarium costs rise 346-fold under China export controls," November 3, 2026. https://eastasiabrief.com/semiconductors/us-samarium-costs-rise-346-fold-under-china-export-1102