 |
| West rare earth pricing |
China Dominates Rare Earths Pricing and Supply Chains
Rare earths pricing remains under China’s control, affecting global markets and Western supply security. Currently, MP Materials’ US deal references the ex-works China NdPr index. As a result, the West relies on Chinese pricing despite domestic production growth. Meanwhile, China controls physical liquidity for critical metals like neodymium and praseodymium (NdPr), shaping global supply dynamics. Western producers face divergent market conditions and restricted Chinese exports.
Building Western Pricing Mechanisms to Reduce Dependence
To escape China’s chokehold, the West must create its own rare earths pricing index. The US Department of Defense can switch reference points once a recognized ex-China index emerges. Benchmark Mineral Intelligence, CME Group, and Intercontinental Exchange explore alternatives. Meanwhile, lithium futures provide a blueprint, showing how Western markets can reduce reliance on Chinese exchanges. As a result, transparent pricing enhances financing opportunities for new critical minerals projects.
Implications for Investors and Strategic Supply Chains
Independent rare earths pricing can stabilize markets and attract investment. Currently, taxpayers benefit as MP Materials’ output avoids subsidies while prices stay above $110/kg. However, until Western pricing matures, global markets remain influenced by Chinese ex-works indices. Transparency in pricing and supply chain development will determine long-term resilience. In turn, this approach strengthens the West’s strategic autonomy in critical minerals.
ScrapInsight Commentary
China dominates rare earths pricing, limiting Western supply chain autonomy. Developing independent indices and futures markets is crucial to reduce risk. Investors should monitor NdPr pricing reforms to guide strategic decisions.
