Analysts suggest that prices of rare earth minerals are poised to stabilize in 2025 after experiencing a two-year decline. This shift is attributed to reduced mining output in China aimed at protecting domestic producers, coupled with increasing demand from electric vehicles and humanoid robots, which is gradually depleting the current supply glut.
Key Highlights:
Price Trends:
Rare earth prices have risen by 2% so far in January, following a significant decline of nearly two-thirds from their peak in February 2022 due to oversupply conditions.
China, which produces about 90% of refined rare earths, controls the market through stringent quotas.
Future Demand:
Analysts predict that sustained tight control over production growth in 2025, alongside robust demand from the clean energy sector, will support price stabilization.
The end of the two-year price downturn is expected to provide relief for producers facing heavy losses and bolster non-Chinese projects aimed at reducing reliance on China for critical minerals.
Market Insights:
Scott Dunn, CEO of Noveon Magnetics, emphasized the positive impact of market reversion on businesses like his, which manufactures sintered NdFeB magnets used in electronics.
The surplus of neodymium praseodymium (NdPr) oxide is projected to decrease significantly, narrowing from 5,400 tons in 2024 to 500 tons in 2025, according to Guolian Securities.
Demand for NdFeB Magnets:
Demand for NdFeB magnets, crucial for wind turbines and electric vehicles, is expected to grow by over 15% in 2025, pushing NdPr supplies into deficit this year, as noted by Willis Thomas from CRU Group.
Supply Constraints:
China’s Mining Quotas:
Analysts expect that supply growth in China will remain constrained as the government maintains strict mining quotas to alleviate pressure on domestic miners and conserve strategic resources.
Forecasts indicate that rare earth quotas in 2025 will mirror last year’s subdued levels, with mining output and smelting quotas showing only modest increases.
Environmental Regulations:
Chinese firms face challenges in scaling up production while complying with environmental regulations, which may further limit supply growth.
Market Outlook:
While the current supply constraints are expected to impact market balance eventually, analysts believe it will take time for these changes to significantly affect the overall market dynamics.