Rare earth prices “take off,” with overseas prices even higher

Prices for major rare earth varieties have risen rapidly, with an average increase of over 100,000 yuan per ton since August. As of August 21, the quoted price for praseodymium oxide was 657,500 yuan per ton, representing a year-to-date increase of over 58%; the quoted price for neodymium oxide was 657,500 yuan per ton, representing a year-to-date increase of 62.95%; prices for praseodymium-neodymium metal reached 767,500 yuan per ton, up 56.15% year-to-date; and prices for praseodymium-neodymium oxide reached 631,500 yuan per ton, up 58.66% year-to-date.

Guangda Securities analyzed that the primary reasons for the rare earth price increases are the continued tightening of supply, coupled with structural surges in demand, leading to product shortages that drive prices higher.

Supply side: The earthquake in Myanmar disrupted imports of medium and heavy rare earths, and China imposed export controls on seven categories of medium and heavy rare earths, including samarium, gadolinium, and terbium, limiting 80% of global medium and heavy rare earth supply. On the policy front, the growth rate of domestic rare earth mining quotas has slowed (only a 5% year-on-year increase by 2025), and the quotas have not been publicly disclosed, further tightening supply.

Demand side: Explosive demand from emerging sectors such as new energy vehicles, wind power, and humanoid robots, coupled with集中 procurement by major magnet material manufacturers to replenish inventories, has driven sustained growth in demand for core varieties like praseodymium and neodymium. Additionally, overseas manufacturers, considering inventory safety, will continue to have replenishment needs, further driving rare earth demand.

Rare earth prices in overseas markets are significantly higher than those in China. On July 10, the U.S. Department of Defense acquired a 15% stake in MPMaterials for $400 million, while committing to purchase praseodymium-neodymium oxide at a price of no less than $110 per kilogram, significantly higher than domestic prices (based on domestic praseodymium-neodymium prices as of July 10, the premium is approximately 74%).

Looking ahead, amid the intensifying trend of “de-globalization,” rare earths, as a strategic national resource with dual military and civilian applications, are subject to stricter supply controls, further highlighting their strategic importance in national resource security.