China is the world’s largest rare earth metals supplier and is reported to keep 2012 export quotas in line with 2011. Higher prices and a global slowdown are influencing this decision, along with an attempt to dominate the segment of the market.

The rare earth metals-focused exchange traded fund, Market Vectors Rare Earth/ Strategic Metals (NYSEArca: REMX), may have a chance to brea kout of the negative pattern seen in 2011 as China has announced that export amounts will remain steady. China is the key exporter of rare earth metals used in making defense systems, wind turbines and iPhones, among other things. [Rare Earth ETF Hurt as Companies Curb Spending]

The rare earth ETF is down nearly 40% this year.

Dow Jones Newswires reports that China controls about 95% of the world’s rare earth metal supply. Export quotas had been reduced previously in an effort to control prices, which has led to a price surge in recent years.

“There is an economic war over the rare earths, with China on one side, and other industrialized nations on the other: Japan, the United States, and the Eurozone,” said Luisa Moreno, Jacob Securities analyst, in the report. “China is probably winning. It has decreased exports in the last few years and increased protection. It has attracted a great deal of the downstream business and it is positioning itself well.” [Investors Betting Against the Dollar with New ETFs: Analysis]

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