For the past two years, the world has had a rare earth problem.

A man works at the site of a rare earth metals mine in Nancheng County, China. (Reuters)

Okay, that's not quite as weird as it sounds. Rare earth metals are crucial for a wide range of electronics, from fluorescent bulbs to iPod headphones to hybrid vehicles. And China produces 95 percent of the world's supply. So when China began sharply restricting exports in 2010 — allegedly to give its own industries an advantage — the global prices for rare earths skyrocketed. Bad news.

Except now it's looking like the rare earth crisis is receding. As this chart from Reuters' Scott Barber shows, the prices for various rare earth metals have started to fall quickly after exploding in 2010. (Gold and silver are in there for comparison to show that this isn't related to a general swing in commodities.)

So what happened here? One key thing to note is that, despite their colorful name, rare earth metals aren't actually all that rare. At one point or another during the twentieth century, Brazil, India, the United States and South Africa were all major producers. It's just that, in the 1980s, China decided to ramp up production massively, driving out competitors and cornering the market. (China managed to do this, in part, by going easy on  environmental oversight of mining, which can be a horrifically dirty process.)

Then in 2010, China decided to restrict its export quota by 40 percent. That helped drive prices up and suddenly made it economical for other countries to start boosting their own production again again. Out in Mountain Pass, Calif., for instance, Molycorp is now reopening and expanding its massive rare earth metals mine.

Meanwhile, Japan has rushed to reduce its dependence on rare earths over the past few years—especially since China has a habit of restricting exports every time the two nations get into a territorial spat. Panasonic has developed a technique to recycle neodymium from old electronic appliances. Honda is extracting rare earths from used car batteries. TDK Corp., which creates magnets for motors, now sprays dysprosium on its motors rather than mixing it in, in order to conserve. All told, reports the Asahi Shinbun, Japan's demand for rare earths dropped from 31,000 tons in 2010 to 23,000 tons in 2011.

So even though China is still the world's largest rare earths supplier, its ability to control the global market has lessened greatly. Within two years, the market adjusted. As a result, Barber notes, "China itself also is changing its tune and has announced a higher export quota."

Related: A look at how China came to dominate the rare earth industry in the first place.