Weak demand for rare earths combined with ample supplies are weighing on prices of the group of 17 minerals used in technologies from lasers to EVs, with little near-term catalyst in sight, industry participants said.
Exports of rare earths from China, the dominant producer, climbed 7.5 per cent year-on-year in the first seven months of 2024, but prices still fell during that period and are hovering near their lowest in more than three years.
“We have recently received a lot of offers, asking us whether we need cargoes, which makes me feel it’s not easy for them to find buyers now,” said a London-based buyer of rare earths, declining to be named as the person was not authorised to speak with the media.
The dysprosium oxide price has shed 32 per cent so far this year and terbium oxide has fallen 26 per cent, Argus Media data showed.
“Dysprosium and terbium are at particular risk of oversupply within China because local magnet makers have cut their consumption of these materials significantly in the past decade in order to lower production costs,” said Ellie Saklatvala, an analyst at Argus Media.
Prices of neodymium oxide and praseodymium oxide have both shed around 15 per cent in 2024, Shanghai Metals Market data showed.
Analysts expect China to trim the growth in its rare earths mining quota this year after last year’s quota grew an annual 21.4 per cent to 255,000 tons.
Prices rose in July on market expectations that Beijing would buy rare earths for state stockpiles, retreating partially when no such purchase took place, industry insiders said.
The National Food and Strategic Reserves Administration, China’s state stockpiler, did not respond to a request for comment.
“It’s hard to tell how … demand will perform, as it seems that consumption areas, except new energy vehicles, are not very optimistic,” said a China-based rare earth magnet producer.
A rare earths processor in China’s Jiangxi province said they expect the market to stabilise after October, blaming recent weakness on a wave of selling ahead of national security regulations unveiled in June on the mining, smelting and trade in rare earths that take effect on Oct. 1.
“Demand from the EV sector has been on the rise in recent years, but there is more supply, way too much,” the person said.
Floundering prices have hurt profits and revenues of producers including China Northern Rare Earth, China Rare Earth Resources and Technology, MP Materials and Lynas Rare Earths.
Edvard Christoffersen, an analyst at consultancy Rystad Energy, said in an Aug. 14 webinar that many producers are operating at a loss and stockpiling supplies as they wait for a better time to sell.
“But we do expect that eventually demand will pick up for rare earths,” he said, pointing to long-term demand growth in energy transition sectors such as EVs and wind turbines.