Rare earth prices spike as US firm halts China trade

Prices of rare earth elements have surged to their highest level in more than two years after MP Materials stopped shipments to China, Reuters first reported.

For the past three years, MP Materials supplied between 7% and 9% of China’s neodymium and praseodymium (NdPr) oxide, key ingredients for permanent magnets used in electric vehicles, wind turbines, and defense hardware.

However, under a July deal with Washington, MP agreed to halt exports to China and refine its output domestically. The US government also offered price support at $110 per kilogram—around double Chinese levels at the time—to secure production at home.

Benchmark NdPr oxide prices in China have jumped 40% since early July to 632,000 yuan per tonne (about $88/kg), the highest since March 2023.

MP’s shipments made up an important feed of NdPr oxide supply for China’s factories that it would have to find elsewhere, Adamas Intelligence managing director Ryan Castilloux told Reuters.

US – China

The surge comes alongside new regulatory steps in China and more tariff threats from U.S. President Donald Trump. Beijing recently expanded its quota system to cover imported feedstock as well as domestically mined rare earths, requiring companies to submit monthly data on mineral flows. Trump warned this week of “200% tariffs, or something” on rare earth-related products unless China guarantees magnet shipments to the U.S.

Analysts say Beijing’s move tightens its grip on global supply chains, adding to earlier restrictions on rare earth magnets and smelting output quotas. China accounts for 90% of rare earth refining capacity and about 70% of mined output. The Economist warned this month that Beijing’s tactic would backfire in the long run because it spurs the West to find new mines, while China still needs the high-performance computer chips that America wields in trade talks. 

China, the world’s largest producer of permanent magnets, restricted exports in April following earlier U.S. tariff hikes. The move had an immediate impact: permanent magnet shipments to the U.S. fell 58% in April and 81% in May compared with the prior month, SCMP reported.

At the same time, demand for NdPr is rebounding. China is in peak manufacturing season for EVs, wind turbines, and electronics, putting extra pressure on supply, according to Benchmark Mineral Intelligence. Analysts expect demand growth of around 10% this year, outpacing the 5% increase in Chinese output.

MP Materials’ shares have gained 3.4% in New York this week to $70.80, giving the company a $12.5-billion market capitalization.