 |
| MP Materials |
The rare earth market experiences a significant price surge as MP Materials stops exports to China. This disruption impacts global neodymium and praseodymium (NdPr) oxide supplies, crucial for permanent magnets used in electric vehicles, wind turbines, and defense sectors.
Supply Disruption and Price Impact on NdPr Oxide
MP Materials supplied 7% to 9% of China’s NdPr oxide needs for three years. However, a July agreement with the US government mandated halting exports and increasing domestic refining. Consequently, NdPr oxide prices in China jumped 40% since early July, reaching 632,000 yuan per tonne. Meanwhile, Beijing expanded its quota system to control both imported and domestic rare earth materials. This move strengthens China's dominance, as it controls 90% of refining capacity and 70% of mining output.
Geopolitical Tensions and Market Regulation
US President Trump escalated tensions by threatening tariffs up to 200% on rare earth-related products unless China guarantees magnet shipments to the US. China restricted exports following US tariff hikes, causing permanent magnet shipments to the US to plummet by over 80% in May. Despite trade frictions, demand for NdPr is rising due to peak manufacturing seasons in China’s EV, wind turbine, and electronics sectors. Analysts forecast demand growth of 10% in 2025, surpassing China's output increase.
Market Outlook and Strategic Implications
The suspension of MP Materials’ shipments created a supply void in China, causing price volatility. Additionally, the US government’s price support of $110 per kilogram aims to stabilize domestic production. The evolving geopolitical climate and supply chain restrictions will continue to pressure rare earth markets. MP Materials’ recent stock increase reflects investor optimism amid these changes.
ScrapInsight Commentary
The rare earth market faces heightened volatility as supply disruptions intersect with geopolitical tensions. Prices for NdPr oxide will likely remain elevated, supported by US domestic policies and China’s regulatory controls. These dynamics underscore the strategic importance of rare metals in clean energy and defense sectors, emphasizing the need for supply chain diversification.
