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Rare Earth Prices Surge, Boosting US Miners
18 Feb
Summary
- Rare earth prices for EV and defense magnets have nearly doubled.
- Prices above $110/kg mean no US subsidies for MP Materials output.
- China dominates global refining and mined rare earth output.
Prices for two crucial rare earth elements, vital for creating powerful magnets in electric vehicles and defense equipment, have significantly increased. Over the past seven months, these prices have nearly doubled, reaching $123 per kg, the highest since July 2022. This rally is primarily attributed to robust downstream magnet demand and deliberate supply management within China, which controls 90% of global refining capacity.
The surge in prices means that the U.S. government's price support for miner MP Materials' neodymium and praseodymium (NdPr) output is no longer required, as the market price now exceeds the $110 per kg floor. This development benefits other Western rare earth companies, as the U.S. aims to reduce reliance on China for these critical materials.
MP Materials was previously stipulated by the Pentagon to halt shipments of its mined output to China. This cessation of supply coincided with a tightening of supply within China, which analysts linked to reduced mining and smelting quotas. However, market analysts caution that the current price elevation may be temporary, with expectations of a downward correction by the end of March.
