A RaboResearch report says US rare earths stockpiles could cover only about two months once depleted by the Iran conflict. It says this could give China added leverage in talks with the US.
The report says control of rare earth supply could affect how long US strikes on Iran can continue. It also says limited supply could restrict US policy choices and raise the risk of escalation or unconventional responses.
It says rare earth supplies could become a main issue in discussions between Donald Trump and Chinese President Xi Jinping. It also says the US could use the risk of further disruption in energy markets as pressure if rare earth supply problems arise.
The report notes suggestions that Beijing may prioritise oil market stability and continued oil flows, despite alignment with Tehran. The article states it was produced with help from an AI tool and reviewed by an editor.
Looking back at the events of 2025, we saw how the conflict with Iran quickly revealed our critically low rare earths inventories. This situation exposed a major strategic vulnerability, leaving only about two months of supply at the time. The potential for China to use this as leverage in negotiations became a dominant market fear.
Now, in March 2026, the ripple effects are still being felt across markets. While Washington has accelerated funding for domestic processors like MP Materials, these projects have long lead times. Recent customs data from January 2026 shows China’s export quotas for heavy rare earths remain tight, keeping prices firm and supply chains on edge.
This ongoing uncertainty creates a clear opportunity for derivative traders. The VanEck Rare Earth/Strategic Metals ETF (REMX), which saw immense volatility throughout 2025, is still showing high implied volatility in its options chain. This suggests that strategies designed to profit from large price swings, regardless of direction, could be advantageous.
The risk is not confined to the commodities themselves; it is a significant headwind for key industrial sectors. Major defense contractors and electric vehicle manufacturers signaled in their early 2026 earnings calls that securing rare earth supplies is a top priority. Any new export restrictions from Beijing could immediately pressure these stocks, creating openings for those positioned with put options.
We must remember the underlying dynamic that while Beijing may prefer stability, the option to restrict supply remains a powerful lever. The tail risk of supply disruption, first highlighted in 2025, means any renewed geopolitical friction could trigger wild price action. Traders should remain nimble and prepared for headlines to dictate short-term market direction.
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