Bajaj Auto, Hero MotoCorp shares fall over 2% as China's rare earth exports drop 53% in May

For the January-May period, China’s total rare earth magnet exports slipped 14.5 percent year-on-year to 19,132 tons

Shares of Bajaj Auto and Hero MotoCorp fell over 2 percent each on June 20 after a sharp plunge in China’s rare earth magnet exports raised fresh concerns over supply disruptions. With exports hitting a five-year low in May amid tighter controls and customs scrutiny, investors fear potential production hurdles for automakers dependent on these critical components.

Outbound shipments of rare earth permanent magnets stood at just 1,238 metric tons last month, down nearly 53 percent from April and marking the weakest monthly figure since February 2020, The Economics Times reported, citing General Administration of Customs data. Compared to the same month last year, exports slumped 74 percent. April had also witnessed a sharp drop, with volumes halving from March levels.

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The sharp decline follows Beijing’s move in early April to impose new restrictions on the export of seven medium-to-heavy rare earth products and certain magnets—materials vital to the production of electric vehicles, semiconductors, wind turbines, and military equipment. China dominates global supply, accounting for more than 90 percent of rare earth magnet production.

In its Q4 earnings call, Bajaj Auto flagged that it's a 'dark cloud on the horizon' and if this persists, production could come to a grinding halt as early as July. While Commerce Minister Piyush Goyal said that the Indian government is actively exploring alternatives, including diplomatic efforts and the development of new supply chains. According to Goyal, the Indian embassy is already in discussions with Chinese authorities on the matter, and the commerce ministry is engaged as well.

For the January-May period, China’s total rare earth magnet exports slipped 14.5 percent year-on-year to 19,132 tons—the lowest for the period since 2021, raising fresh concerns for industries globally that rely heavily on Chinese supply, the report added.

At about 11 am, shares of Bajaj Auto were trading 2.2 percent lower, while Hero MotoCorp shares were down 2.4 percent. Nifty Auto, on the other hand, was up almost 1 percent.

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