Rare Earth ETF Sinks as Chinese Blacklist and Insider Sales Compound Sector Woes
Published on 07/20/2026 at 16:55 | Redaktion boerse-global.de
The VanEck Rare Earth/Strategic Metals ETF was supposed to be a beneficiary of the intensifying geopolitical tug-of-war over critical minerals. Instead, it has lost more than a quarter of its value in the past 30 days, with the shares changing hands near €12.08 after another 1.1% drop on Monday. The fund is now down 36% from its May peak of €18.76, and the pain shows no sign of abating.
At the heart of the rout lies MP Materials, the US rare earth producer that accounts for one of the largest single holdings in the fund. The stock hit a fresh 52-week low on July 19, shedding more than half its value since the October 2025 record. The latest leg of the decline was accelerated by a 14% slide between June 12 and July 13, a move that began when Beijing added MP Materials and USA Rare Earth to its export control list on June 22.
Beijing’s Leverage Bites Deeper Than Expected
China’s decision to restrict dual-use goods and Chinese-made components to MP Materials sent shock waves through the sector. Although the company itself has limited reliance on Chinese suppliers, the broader supply chain is deeply entangled. Many vendors that provide finished systems to MP Materials still depend on Chinese subcomponents, making the export curbs a far-reaching constraint.
The move was part of a wider crackdown that saw ten US firms placed on the blacklist. For Washington, the timing is particularly painful: the US remains heavily dependent on Chinese imports for rare earth materials, even as it tries to build a domestic supply chain. Pentagon support for MP Materials remains substantial — a $400 million investment, a $150 million loan, and roughly $1 billion in facilitated financing — but that has done little to stem the selling.
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Insider Sales Undermine Sentiment
Adding to the political headwinds, corporate insiders have been heading for the exits. Over the past quarter, MP Materials’ top executives — including the CEO and CFO — sold more than 1.2 million shares. Such insider selling during an already fragile market phase has further eroded confidence, even as the company delivered a solid operational performance.
First-quarter 2026 revenue jumped 49% to $90.6 million, while neodymium-praseodymium output hit a record 917 tonnes, up 63% year-on-year. Adjusted EBITDA swung to a positive $36.6 million. Yet investors focused instead on the eleventh consecutive quarter of operating losses, steep start-up costs for the new 10X magnet plant, and downward revisions to earnings estimates. The stock’s forward price-to-sales ratio of more than 14 — versus an industry average of under 2 — left it especially vulnerable when risk appetite evaporated.
Wall Street Split on Direction
Analysts have been trimming their price targets, though the consensus remains divided. Deutsche Bank cut its target from $70 to $61 on July 9, followed by Barclays, which lowered its target from $69 to $65 on July 13. Morgan Stanley, Goldman Sachs and BMO Capital have held onto their bullish stances for now, leaving the near-term outlook for MP Materials uncertain.
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Technicals Signal Oversold, but Geopolitics Trump Charts
The ETF’s 14-day relative strength index has plunged to 23.6, a level that traditionally signals a deeply oversold market. Annualized 30-day volatility stands at 41.67%, underscoring the extreme nervousness among holders. On a 12-month view, the fund is still up 40.6%, which highlights the violent swings that have become characteristic of the rare earth space.
But an oversold reading alone cannot resolve the geopolitical standoff. Beijing’s licensing practices remain the dominant unknown, and the next earnings report from MP Materials will be closely watched for evidence of how severely the export restrictions are hitting operations. Until the US-China supply chain impasse shows signs of easing, the rare earth ETF is likely to remain caught between Washington’s ambitions and Beijing’s leverage.
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