As we enter 2025, the rare earth metals industry finds itself at a critical juncture. After two years of declining prices and oversupply, January has brought signs of stabilization and potential growth in this crucial sector. Here’s an analysis of the key developments and trends shaping the rare earth market:
Price Stabilization and Supply Constraints
January 2025 has seen a modest 2% increase in rare earth prices, potentially signaling the end of a two-year downturn. This uptick comes as China, which produces roughly 90% of refined rare earths, tightens its control over mining output. The move aims to protect domestic producers and address the supply glut that has plagued the market since 2023. According to Fastmarkets, terbium oxide 99.99% for China dropped to $730-795 per kg on July 11, 2024, compared with $980-1,100 per kg on January 4, 2024, illustrating the extent of the price decline over the past year.
Shifting Supply-Demand Dynamics
The surplus of neodymium praseodymium (NdPr) oxide, a key component in permanent magnets, is expected to narrow significantly in 2025. Analysts at Guolian Securities forecast the surplus to shrink from 5,400 tonnes in 2024 to just 500 tonnes this year.This tightening supply-demand balance could support price stability and potentially drive growth in the sector. Global rare earths output has rapidly risen from 240,000 metric tons in 2020 to 350,000 metric tons in 2023, according to US Geological Survey data, highlighting the rapid expansion of production capacity in recent years.
Emerging Applications Driving Demand
The rare earth market is poised for growth, driven by increasing demand from the clean energy and high-tech sectors. Demand for NdFeB magnets, used in wind turbines and electric vehicles, is projected to grow by over 15% in 2025. Additionally, the expansion of robotics applications may usher in another growth year for rare earth magnetic materials. Argus Media forecasts that by 2034, Dysprosium prices could surge to US$1100/kg of rare earth oxide (REO), representing a 340% increase from today’s rates. Under a scenario factoring in an ‘incentivised price’ premium, dysprosium could reach US$1400/kg, a 450% jump over current levels.
Geopolitical Factors and Supply Chain Resilience
The rare earth industry continues to be influenced by geopolitical considerations. In late 2023, China imposed bans on exporting technologies for rare earths processing, tightening its grip on the global supply chain. By mid-2024, China’s State Council introduced stricter regulations on domestic rare earths mining, smelting, and trading, effective October 1, 2024. In response, the United States imposed tariffs on Chinese EVs and critical minerals, aiming to reduce dependence on Chinese supply chains and bolster domestic production. The U.S. has also made a significant $17.5 million investment aimed at developing domestic processing capabilities.
The Rare Earth Renaissance: An Outlook For Navigating the Turbulent Tides of
Early 2025
As the frost of winter gives way to the first buds of spring, the rare earth metals sector finds itself in the throes of a dramatic metamorphosis. The early months of 2025 are set to be a crucible of change, forging new paradigms in an industry long dominated by predictable patterns and entrenched players.
At the forefront of this transformation is the tightening grip of China on the global rare earth supply chain. On December 21, 2023, China announced a ban on rare earth extraction and separation technologies exports, a move that sent shockwaves through the industry. This strategic decision, coupled with the implementation of new regulations on rare earth administration effective October 1, 2024, has further solidified China’s dominance in the sector. These regulations introduce stringent rules governing every aspect of the rare earth industry, from mining to export, and are expected to result in tighter supplies and higher costs in the global market.
The impact of these policies is already being felt.
According to Mordor Intelligence, the Rare
Earth Elements Market is expected to reach 182.36 kilotons in 2025, growing at a CAGR of 4.19% to reach 223.91 kilotons by 2030. This growth, while significant, is tempered by the geopolitical tensions and supply chain disruptions that characterize the current market landscape.
In response to China’s tightening control, other countries are scrambling to diversify their rare earth sources. The United States, in particular, has been making significant strides in this direction. As reported by the Center for Strategic and International Studies, the U.S. has recently made substantial funding decisions to address its vulnerability in rare earth processing, especially for heavy rare earths, of which China currently separates 99.9%.Despite these challenges, demand for rare earth elements continues to surge, driven by the rapid advancement of technologies that rely heavily on these critical materials. The mobile phone sector in emerging markets is a prime example, with China’s unique mobile subscribers projected to reach 1.26 billion by 2025. Similarly, the automotive and renewable energy sectors are fueling demand, with industry estimates suggesting that annual demand for rare earth metals could reach 315 kilotons by 2030.
However, the market outlook for 2025 is not without its complexities. John Ormerod, head of magnetics at metal consultancy JOC LLC, predicts that global rare earth magnet demand will continue to rise in 2025, but at a more modest rate of around 5%, down from previous expectations of 9%. This tempered growth is attributed to factors such as the state of the Chinese economy, rare material pricing, and the evolving landscape of electrified vehicles.
As these tectonic shifts reshape the landscape, the rare earth metals sector of early 2025 bears little resemblance to its former self. With new players emerging, technologies evolving, and geopolitical forces colliding, the industry stands on the precipice of a new era. Those who can navigate these turbulent waters with agility and foresight will find themselves at the vanguard of a rare earth renaissance, shaping the future of technology and global politics for decades to come.
