After China imposed limits on rare earth exports, prices surged on the severe reduction in supply. However, now industries are cutting back on rare earths, sending prices and the exchange traded fund that tracks rare earth miners much lower.

Market Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX) is down about 33% over the past six months and is one of the worst-performing ETFs during the period.

International prices on magnetic rare earths used in electronics have fallen by around one-third since August and some light rare earths have even fallen as much as two-thirds, reports Keith Bradsher for The NY Times.

Since the high run up in rare metals earths prices, large corporations in the U.S., Europe and Japan that incorporate rare earths in their manufacturing are moving over to China, lowering inventories, switching to alternative metals or diminishing production.

“We all learned a hard lesson in July and August, how high these prices can go before customers begin yelling,” Mark Smith, the chief executive and president of Molycorp, the only American producer of rare earths, said in the article.

Consequently, the lower demand for rare earths outside of China caused speculators to sell positions, which further dragged on prices. The prices on many rare earths have skyrocketed in the last few years, ever since China, which accounts for 94% of the world’s rare earth metals production, cut back exports.

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