Rheinmetall’s Chinese Export Ban Has Yet to Rattle a Stock Still Recovering From a Steeper Slump
Published on 07/26/2026 at 13:32 | Redaktion boerse-global.de
China’s decision to slap export controls on Rheinmetall, alongside 13 other European firms, has so far failed to spook investors. The stock closed Friday at €1,032.60, up 1.29% on the day, as traders appeared to treat Beijing’s move as a political gesture rather than an immediate threat to earnings.
The curbs, announced by China’s Ministry of Commerce, target dual-use goods — technologies with both civilian and military applications — including rare earths, sensors and chemicals. The ban takes effect immediately and is designed to prevent circumvention via third countries. It is a direct retaliation for the European Union’s latest sanctions package against Russia, which also names Chinese and Hong Kong-based entities.
Rheinmetall joins sensor specialist Hensoldt and truck maker Tatra on the restricted list. Hensoldt had already been placed on a similar list in April. The timing is particularly sensitive: the EU had previously granted Ukraine a special permit to buy €3.9 billion worth of drone components from China, as reported by the Financial Times in mid-July. Chinese parts are now found in nearly every drone, including European models, and Russia has long pressed for these supply chains to be severed. The impact on Ukraine’s drone production, heavily reliant on Chinese inputs, could be significant — though it remains unclear to what extent Rheinmetall itself depends on Chinese dual-use components.
A €350 Million Bet on Artillery Powder
While the geopolitical headlines grabbed attention, Rheinmetall is pressing ahead with a major expansion at its Aschau am Inn site in Bavaria. The company is investing €350 million to ramp up production of propellant powder, part of a broader €650 million program. Annual output is set to rise from the current 1,700 tonnes to 4,200 tonnes by 2028, with a longer-term target of 20,000 tonnes by 2030. The workforce at the site will grow from 800 to 1,300 employees.
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The investment is designed to meet surging demand from the Bundeswehr, NATO and EU partners, as Europe scrambles to replenish ammunition stocks depleted by the war in Ukraine. Rheinmetall’s order backlog stood at €73 billion at the end of the first quarter, providing a multi-year cushion.
The MGCS Collapse and a National Fallback
A more strategic setback is unfolding in the Franco-German tank program. The Main Ground Combat System (MGCS), intended to produce a joint successor to Germany’s Leopard 2 and France’s Leclerc, has effectively collapsed, according to reports from the NZZ. The main sticking point was the caliber of the main gun: Rheinmetall pushed for 130mm, while French partner KNDS favored 140mm.
Germany is now proceeding independently with a Leopard 3, while France develops its own interim tank. The EU is funding two parallel research projects — Germany’s MARTE and France’s FMBTech — each with €20 million. For Rheinmetall, the demise of MGCS brings clarity about the national path but also means losing a major European collaborative project. The company remains a central player in Germany’s land systems sector.
Autonomous Ambitions and a Boeing Partnership
Beyond artillery and armor, Rheinmetall is deepening its push into unmanned systems. Together with the US Marine Corps, American Rheinmetall and Rheinmetall Canada have unveiled an upgraded version of the Mission Master Silent Partner-Hotel, an unmanned ground vehicle with improved mobility, higher payload capacity and amphibious capabilities.
In the air domain, Rheinmetall is partnering with Boeing to offer the Ghost Bat combat drone to the Bundeswehr, with a potential introduction by 2029. The market for autonomous fighter jets is seen as a multi-billion-dollar growth field, with competitors including General Atomics and Anduril also vying for contracts.
A Stock Still Nursing Deep Wounds
Despite the flurry of positive operational news, Rheinmetall’s share price remains under pressure. At Friday’s close, it was still 31% below its 200-day moving average of €1,493.97, and a staggering 48.5% below the 52-week high of €2,007 reached on October 3 last year. The stock hit a year low in late June after the cancellation of the F126 frigate contract, and has since been trying to establish a floor around the €1,000 level.
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The valuation remains stretched: the trailing price-to-earnings ratio stands at 104.62, reflecting elevated expectations for future growth. With a market capitalization of roughly €47.5 billion, Rheinmetall remains one of Europe’s largest defense stocks, but the gap between its operational momentum and its share price performance is widening.
Analysts have grown cautious on the “Zeitenwende” narrative that drove the stock higher in 2022 and 2023, pointing to increasing competition from drone technology that could challenge traditional weapons systems. The China export controls add another layer of uncertainty, though the company has not publicly disclosed its exposure to Chinese dual-use components.
All eyes are now on the first-half results, due in early August. Investors will be looking for concrete evidence that the €73 billion order backlog and the Aschau powder expansion are translating into revenue and margin growth. For now, the China story remains a footnote — but one that could grow louder depending on how deeply Beijing’s restrictions cut into Rheinmetall’s supply chain.
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