China targets rare earths: Rare-earth metals are at the core of the latest round in the US-China trade war, with the Chinese Commerce Ministry introducing new restrictions this month over national security concerns, Bloomberg reported last week. International companies will need Beijing’s approval to export goods if as little as 0.1% of their value comes from certain rare earths sourced from China, and an export license is required for products made using Chinese rare-earth processing technology.

By the numbers: China holds the world’s largest reserves — about 44 mn tons of 17 metallic elements crucial to electronics, defense, and green tech industries. It also dominates mining with 270k tons last year — 70% of the world’s output. Meanwhile, the US has just 1.9 mn tons in reserves and produced some 45k tons in 2024. China also it controls the world’s largest processing capacity, making the rest of the world heavily dependent on its supply chain.

Not the first round: Beijing imposed new export controls in April on seven heavy and medium rare earth elements necessary for EVs and wind turbines manufacturing. These controls expand on measures that have been implemented by China since 2023 in response to US restrictions on chip technology, requiring exporters to obtain licenses for each overseas shipment and banning re-exports to the US.

Feeling the impact: US companies, along with some EU firms, were affected by the pre-existing China’s rare-earth restrictions, including car manufacturer Ford Motor, which had to temporarily shut down a Chicago-based factory in May due to the lack of rare-earth magnets. The US aims to reduce the reliance on China through measures including the Department of War’s USD 400 mn investment in MP Materials — the operator of the only US rare-earth mine in California, as well as exploring sources in Greenland (8th-largest reserves) and Ukraine.

Following China’s move, US President Donald Trump announced the possibility of imposing an additional 100% tariff on imports from China in November, along with possible export restrictions on software, he said in a post on his platform Truth Social.

A relapse into trade wars: Washington and Beijing had reached in May a 90-day truce to their trade war after Geneva talks, with the US slashing tariffs it imposed earlier this year on Chinese goods from 145% to 30% — encompassing the 10% baseline US tariff and an additional 20% linked to fentanyl trafficking — while China lowered its tariffs on US imports from 125% to 10%.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with the Shanghai Composite up 0.6%, Hong Kong’s Hang Seng up 0.3%, and Japan’s Nikkei down 0.8%. Wall Street futures are slightly inching up following big gains for the S&P 500 and other major indexes.

TASI

11,592

+0.9% (YTD: -3.7%)

MSCI Tadawul 30

1,507

+0.7% (YTD: -0.2%)

NomuC

25,803

-0.2% (YTD: -18.0%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

4.75% repo

4.25% reverse repo

EGX30

37,410

+0.1% (YTD: +25.8%)

ADX

10,106

-0.1% (YTD: +7.3%)

DFM

5,953

-0.5% (YTD: +15.3%)

S&P 500

6,655

+1.6% (YTD: +13.1%)

FTSE 100

9,443

+0.2% (YTD: +15.5%)

Euro Stoxx 50

5,568

+0.7% (YTD: +13.7%)

Brent crude

USD 63.57

+0.4%

Natural gas (Nymex)

USD 3.10

-0.7%

Gold

USD 4,145

+0.3%

BTC

USD 115,526

+0.5% (YTD: +23.5%)

Sukuk/bond market index

922.55

-0.1% (YTD: +2.3%)

S&P MENA Bond & Sukuk

151.00

0.0% (YTD: +7.9%)

VIX (Volatility Index)

19.03

-12.1% (YTD: +9.7%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.9% yesterday on turnover of SAR 5.6 bn. The index is down 3.7% YTD.

In the green: SHL (+10.0%), Saco (+6.8%) and Chemanol (+5.7%).

In the red: Naseej (-3.5%), Saudi Re (-2.7%) and Taprco (-2.2%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.2% yesterday on turnover of SAR 64.8 mn. The index is down 18.0% YTD.

In the green: NGDC (+9.9%), DRC (+7.7%) and Neft Alsharq (+7.6%).

In the red: TMC (-6.7%), Alqemem (-5.3%) and Yaqeen (-5.2%).

Tags: