Chinese market sentiment in early May overestimated consumer demand for rare earths oxides, resulting in the first price increases for rare earths dysprosium (Dy) and praseodymium neodymium (PrNd) oxide this year, according to the latest assessment by Benchmark.

This was the first time rare earths prices had recovered after a continuous decline last year, but after a brief recovery, prices are now falling again.

—Benchmark pricing and data analyst George Ingall

Dysprosium oxide went up 10% month-on-month, finishing May at RMB 2,175,000 ($300,150) per tonne, according to Benchmark’s Rare Earths Price Assessment.

The spike in market sentiment produced a less exaggerated price effect on PrNd oxide, a larger market, which went up 0.6% on April to hit RMB 391,500 ($54,027) per tonne, according to Benchmark’s Rare Earths Price Assessment.

Prices fell in the latter half of May as orders failed to materialize at levels initially expected and are not expected to increase further in the near-term since the market is well-supplied.

Rare earth permanent magnets (REPMs) are the biggest end use for rare earth oxides such as PrNd and are used mainly in wind turbines and EV motors as well as consumer goods.

PrNd ores and oxide prices have plummeted since hitting near-record highs in 2022, when Chinese production increases coincided with weakening growth in demand for REPMs. Low prices have geopolitical consequences, Benchmark observed.

Western governments rely on a handful of home producers to build capacity and reduce reliance on China for its REPMs and REPM inputs. Yet prices are far below levels that would incentivize capacity investment at most ex-China producers, including Lynas and MP Materials, the only major rare earths miner-processors in the Western world.

Meanwhile, said Benchmark, the Chinese players that dominate the global markets remain resilient. China is set to produce 84% of global PrNd oxide supply in 2024, according to Benchmark’s Rare Earths Forecast, and has a near-monopoly on REPM production.

Almost all ex-China pipeline PrNd capacity needs prices above current levels to achieve a 15% profit margin or higher, according to Benchmark data. A further 27% would need prices to reach over twice what they are today.

Benchmark’s new Rare Earths Price Assessment provides price transparency for four rare earth elements along with market analysis every month.