The market for rare earths is currently experiencing extreme distortions: The price of yttrium in the form of yttrium oxide, for example, rose to an all-time high at the beginning of the week, making the consequences of Chinese export restrictions clearly visible.
According to data from Asian Metal, the price climbed to around 126 US dollars per kilogram. At the end of 2024, yttrium was still below 8 US dollars per kilogram, which corresponds to an increase of almost 1,500 percent within a few months. This development was triggered by stricter export controls for rare earths from China, which continues to dominate the global market. At the same time, demand for yttrium for high-tech applications in medicine, the aerospace sector and energy technology is increasing.
Yttrium in Focus of China’s Export Controls
Yttrium belongs to the group of rare earths and is traded on the commodity markets predominantly as yttrium oxide. The current price jump to a record level reflects both supply risks and the expectation of further market constrictions. In April of this year, China imposed new export restrictions on various rare earths, including yttrium. Although Beijing has since signaled that it will relax certain deliveries again, the specific design of these regulations is still being negotiated between China and the USA. As long as no clear framework conditions exist, uncertainty in the markets remains high.
Rare earths such as yttrium play a central role in key technologies. Yttrium is used, among other things, in medical devices, in aerospace, in technical ceramics, in laser systems and in superconducting materials. Many of these applications are safety-relevant or technologically difficult to substitute. It is precisely this combination of high technical importance and a limited number of reliable sources of supply that increases the sensitivity of the market to price jumps and political interventions. The fact that the price of yttrium has shot up within a short period of time illustrates how tightly the market is structurally positioned.
Yttrium and the Dependence on China
The current price movements illustrate how strongly the supply chains for yttrium depend on China. According to the US Geological Survey, more than 90 percent of US imports of yttrium in the four years to 2023 came from the People’s Republic. Yttrium is therefore an example of how closely the global raw material flows for critical minerals are linked to Chinese extraction and processing. The protracted trade conflict between the world’s two largest economies has for years revolved not only around tariffs on consumer goods, but increasingly also around strategic raw materials such as rare earths. This includes the entire value chain from extraction to refining and export.
Although China has recently agreed in principle to relax certain export controls, the details for critical materials such as yttrium are still being discussed intensively. In this area of tension, yttrium serves, in a way, as an early indicator. The drastic price increase shows how quickly regulatory risks and political decisions can impact prices. Companies that depend on yttrium, such as those in medical technology, laser optics or high-performance ceramics, are faced with significantly increased procurement costs and greater planning uncertainty. For longer-running projects, this increases the risk that calculations will be overtaken by further price movements.
Yttrium: Reactions in the USA and Australia
Parallel to these developments, the USA is trying to reduce its dependence on Chinese supplies of yttrium. Pentagon-backed initiatives aim to strengthen domestic production of critical minerals. This also includes yttrium. MP Materials, a US company that operates the Mountain Pass Mine in California, extracts yttrium and other rare earths. Currently, however, a large part of the material is being stored while the company prepares an expansion of further processing. The long-term goal is not only to offer raw material concentrate, but also further processed products and thus retain more added value in the country.
This strategy makes the structural problem clear. Although Mountain Pass provides a basis for the primary extraction of yttrium in the USA, the downstream processing and refining had long been strongly relocated to Asia for cost reasons. The reconstruction of own downstream capacities is capital-intensive and time-consuming. Short-term market bottlenecks or sharp price peaks for yttrium cannot be quickly compensated for in this way, even if the political incentives for this are increasing.
Alternatives to Chinese dominance in the field of rare earths are also being promoted in Australia. Lynas Rare Earths, one of the largest independent producers outside of China, operates the Mount Weld Mine in Western Australia and a processing plant in Malaysia. The company already produces a broad spectrum of rare earths and is working to expand its capacities for extracting yttrium from the ore composite. This should enable Lynas to bring targeted yttrium products onto the market in the future in order to meet the demand from industries such as aerospace, electronics and medical technology.
Yttrium between Technology Needs and Geopolitical Pressure
The price jump in yttrium is more than just a short-term market movement. It refers to structural shifts that are increasingly determining the raw materials sector. Geopolitical tensions, trade restrictions, sanction risks and export controls are increasingly influencing the availability of key raw materials. At the same time, the need for high-tech applications in which yttrium plays an indispensable role is growing, for example in medical therapy systems, in high-performance lasers, in special ceramics or in superconducting components for energy and research facilities.
In addition, there is the question of security of supply. States and companies are increasingly striving to make supply chains more resilient, build up strategic stocks and develop alternative sources of supply. Yttrium is an example of how closely technical innovation and geopolitical framework conditions are interwoven. Whether the current record price level will last depends on how quickly additional capacities can be built up outside of China, how export policy develops in Beijing and how industrial demand for yttrium actually develops in the coming years.
