Shares of Bajaj Auto and Hero MotoCorp fell over 2% on June 20 after China’s rare earth magnet exports nosedived nearly 53% in May. The sudden drop has sparked fears of global supply chain disruptions, especially for automakers that rely heavily on these critical materials.
China’s outbound shipments of rare earth permanent magnets dropped to just 1,238 metric tons in May. That’s not just a dip—it’s the lowest monthly tally since February 2020, according to data from China’s General Administration of Customs. On a year-on-year basis, the fall is even steeper—a massive 74% drop.
Why It Matters
Rare earth magnets may sound like something out of a chemistry class, but they’re vital for modern tech—especially electric vehicles (EVs). These magnets are used in motors, batteries, and a range of high-tech gear. China controls over 90% of global production. So, when they sneeze, the world catches a cold.
In April, Beijing added new export restrictions on seven rare earth products. The goal? Tighter control and more scrutiny. But for automakers like Bajaj Auto and Hero MotoCorp, that spells trouble. Their production lines depend on these imports, and now there’s a big question mark over future supply.
Bajaj Already Sounded the Alarm
During its Q4 earnings call, Bajaj Auto had already flagged rare earth availability as a “dark cloud on the horizon.” If this continues, the company warned it might face serious production roadblocks as early as July.
Also Read Sun TV Shares Decline 4% Following Legal Dispute Between Maran Brothers
Government Steps In
Commerce Minister Piyush Goyal said the government is not sitting idle. India is exploring alternatives and trying to create new global supply chains. Diplomatic talks are already underway between Indian and Chinese authorities to smooth things over. But solutions won’t appear overnight.
Market Reaction
As of 11 AM on Thursday, Bajaj Auto shares were down 2.2%, and Hero MotoCorp slipped 2.4%. Interestingly, the Nifty Auto index was up nearly 1%, showing that the hit is company-specific and linked to rare earth concerns.
Meanwhile, China’s total rare earth magnet exports for the January-May period were down 14.5% year-on-year, the lowest for that stretch since 2021. That’s a bad sign not just for India, but for global industries depending on Chinese supply chains.
What’s Next?
This isn’t just a supply glitch. It’s a warning. India’s auto sector, especially EV players, need to diversify their rare earth sources fast or risk major delays.
Also Read Sambhv Steel IPO Opens Soon: Should You Bid at Rs 77 or Rs 82? What the Numbers Say
