Market evolution: Magnets and electromagnets (CN 8505) — 2015–2025

Introduction

This report examines the evolution of EU external trade in products classified under customs code 8505 (CN 8505), covering electromagnets, permanent magnets, electromagnetic couplings and clutches, lifting heads, and related parts. The analysis spans the period 2015–2025 and draws exclusively on the trade data provided. Over the decade, the EU's trade position in magnets and electromagnets has been shaped by three broad dynamics: a growing structural dependence on imports—particularly from China—rising unit values that have inflated trade figures beyond volume trends, and a notable expansion of EU domestic production alongside a shift in export specialisation. These dynamics are examined in the following sections.

1. A Widening Structural Deficit: The EU's Growing Import Dependence

The trade balance deteriorated significantly over the period

The EU has been a consistent net importer of CN 8505 products throughout the entire period. Between 2015 and 2025, the trade deficit in value terms expanded from €541 million to €995 million, representing an 83.9% widening. At its peak, the deficit reached approximately €1.69 billion (2022), before narrowing somewhat in 2023–2025.

Imports grew faster than exports both in absolute value and in percentage terms. Net import reliance increased from 28.8% to 33.1%, underscoring that the EU's consumption of magnets and electromagnets has outpaced its ability to supply from domestic sources or to offset imports through exports.

Volume growth lagged behind value growth, pointing to persistent price inflation

A striking feature of the period is the divergence between volume and value trends. EU imports rose 59.2% in value but only 16.5% in quantity (from 105,708 tonnes to 123,101 tonnes). Similarly, unit import prices climbed from €11,375/t to €15,550/t (+36.7%). On the export side, the effect was even more pronounced: export values grew 39.0% while volumes declined 12.8% (from 34,013 tonnes to 29,651 tonnes), driven by a 59.4% increase in unit export prices (from €19,438/t to €30,983/t).

This pattern suggests that the EU has been importing roughly similar physical volumes but paying considerably more for them, while exporting fewer tonnes at substantially higher unit values. The price escalation reflects a combination of global supply-chain pressures (especially post-2020), rising raw material costs for rare-earth and other magnet materials, and a possible shift toward higher-value-added product segments in EU exports.

The deficit peaked in 2022 and has since partially corrected

The trade deficit was not monotonic. It reached its widest point in 2022 (approximately −€1.69 billion), coinciding with a surge in import values to their record level of €2.63 billion. Imports subsequently retreated to €1.91 billion by 2025, while exports remained relatively stable. This pattern is consistent with a post-COVID and post-energy-crisis inventory correction, as well as with the normalisation of global supply chains in 2023–2024.

2. China's Dominance and the Shifting Geography of EU Magnet Trade

China consolidated its position as the EU's overwhelmingly dominant import supplier

The most consequential structural shift in EU magnet trade over the decade has been the growing concentration of imports from China. In 2015, Chinese imports stood at €698 million, already the largest single-source. By 2025, they had reached €1.37 billion, a 96.0% increase. At the peak in 2022, Chinese imports amounted to €1.91 billion—representing roughly 73% of total EU CN 8505 imports by value that year.

The Herfindahl-Hirschman Index (HHI) for imports by value rose from 3,594 to 5,219 (+45.2%), confirming a substantial increase in supplier concentration. An HHI above 2,500 is generally considered highly concentrated; the EU's import market for magnets now sits well above that threshold.

Traditional Asian suppliers lost ground while new entrants emerged

While China's share surged, other historically important Asian suppliers saw marked declines. Japan's exports to the EU fell 64.3% (from €118 million to €42 million), and South Korea's declined 32.7% (from €70 million to €47 million). This likely reflects the relocation of magnet manufacturing capacity to China and, more recently, to Southeast Asia. Viet Nam, in particular, emerged as a notable new supplier: its exports to the EU grew from a negligible €2.7 million in 2015 to €29.1 million in 2025—a 972% increase—albeit from a very low base and with high year-to-year volatility (coefficient of variation of 0.86).

Export destinations remained more diversified, but with notable shifts

On the export side, the EU's customer base was considerably more dispersed. The HHI for exports by value declined from 1,208 to 986 (−18.3%), indicating a modest diversification. The United States remained the largest single export destination (€194 million in 2025), followed by China (€147 million), the United Kingdom (€69 million), and Switzerland (€73 million).

Two notable shifts stand out:

• Russia collapsed as an export market. EU exports to Russia fell from €14.7 million in 2015 to just €7,164 in 2025 (−100%), almost certainly a consequence of sanctions imposed following the 2022 invasion of Ukraine.
• Mexico emerged as a significant growth market. Exports to Mexico grew 64.6% (from €26.3 million to €43.3 million), reflecting nearshoring trends and Mexico's growing role as a manufacturing hub serving North American supply chains.

Germany dominates EU trade on both sides of the ledger

Among EU member states, Germany was the largest importer (€865 million in 2025, up 83.6% from 2015) and the largest exporter (€470 million, up 17.5%). This reflects Germany's central role in European automotive, industrial machinery, and electronics sectors—all major end-use markets for magnets and electromagnets. Other significant importers include France (€176 million, +76.2%), Italy (€152 million, +36.0%), and Hungary (€137 million, +46.9%), the latter reflecting the growing importance of Central European manufacturing in electromagnet-intensive industries.

3. Value Over Volume: Product Mix, Production Expansion, and Rising Specialisation

Permanent magnets of metal (CN 850511) drove the import value surge

Breaking down trade by product subcategory reveals that the most dramatic value increase occurred in permanent magnets of metal (CN 850511). Import values for this subcategory more than doubled from €503 million in 2015 to €1.06 billion in 2025 (+111.8%), while quantities grew from 22,629 tonnes to 38,058 tonnes (+68.2%). Unit prices rose from €22,215/t to €27,974/t (+25.9%).

CN 850511 imports are the most price-sensitive to global rare-earth and specialty metal market conditions, and their explosive growth reflects the surging demand for high-performance permanent magnets driven by the energy transition (electric vehicles, wind turbines) and electrification trends. By 2025, this single subcategory accounted for approximately 56% of all EU CN 8505 imports by value.

EU exports are dominated by higher-value-added electromagnet products

The EU's export profile differs markedly from its import profile. The largest export subcategory was CN 850590 (electromagnets and parts), valued at €491 million in 2025 (up 51.6% from 2015), followed by CN 850520 (electromagnetic couplings, clutches, and brakes) at €228 million (+44.8%). These are technologically sophisticated, application-specific products where EU manufacturers retain competitive advantages. Permanent magnet exports (CN 850511 and 850519 combined) were comparatively modest at approximately €200 million in 2025.

This asymmetry—importing bulk permanent magnets while exporting precision electromechanical components—reflects the EU's broader position in the global value chain: specialised in high-technology assembly and integration, dependent on external suppliers for upstream magnet materials.

EU domestic production expanded dramatically

Perhaps the most striking data point concerns EU production volumes, which increased from 41.0 million kg in 2015 to 104.6 million kg in 2025 (+155%). Production values rose even more sharply, from €412 million to €2.0 billion (+386%). This suggests a major build-out of EU manufacturing capacity, likely driven by strategic concerns around supply-chain security for critical raw materials and by EU policy initiatives such as the Critical Raw Materials Act.

The most specialised EU producers of CN 8505 products, as measured by revealed symmetric comparative advantage (RSCA), were Romania (RSCA 0.51), Luxembourg (0.34), and Germany (0.32). Germany alone accounted for 41.0% of EU production value in 2025, followed by France (10.4%).

The EU's export propensity rose sharply, signalling growing integration in global supply chains

Export propensity (exports as a share of domestic production) increased from 27.2% in 2015 to 43.6% in 2025 (+60.3%). This indicates that EU manufacturers are not merely producing for domestic consumption but are increasingly integrated into global magnet and electromagnet supply chains. Trade intensity (total trade relative to production plus consumption) also rose from 56.6% to 70.8%, confirming that the EU magnet market has become more internationally oriented over the decade.

Conclusion

The EU's trade in magnets and electromagnets over 2015–2025 tells a story of intensifying globalisation, rising strategic vulnerability, and nascent industrial policy responses. The trade deficit widened substantially, driven above all by surging imports of metal permanent magnets (CN 850511) from China—a category whose value more than doubled as demand from electric mobility and renewable energy sectors accelerated. China's dominance of EU imports deepened considerably, with supplier concentration rising to historically high levels.

At the same time, EU domestic production expanded dramatically (+155% in volume, +386% in value), suggesting that European policymakers and manufacturers have begun to respond to these structural dependencies. The EU's export profile remained anchored in higher-value-added electromechanical products (CN 850590 and 850520), where competitive advantages persist, but export volumes declined even as export values grew—underscoring the pervasive role of price inflation across the sector.

Looking ahead, the key challenge for the EU lies in reducing its import concentration risk while scaling up domestic permanent magnet production capacity sufficient to meet the demands of the green transition. The data suggests that this process is already underway, but China's entrenched position remains formidable.