Rare earth prices at two-year high as MP Materials halts China shipments

[Ben Graham]

Prices of rare earth elements have surged to their highest level in more than two years after MP Materials halted 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 were a very material portion of NdPr oxide supply for China’s factories, so that’s left a big void,” managing director at Adamas Ryan Castilloux told Reuters.

Beijing tightens control

The surge comes alongside new regulatory steps in China. 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. Analysts say this strengthens Beijing’s grip on global supply chains, adding to earlier restrictions on rare earth magnets and smelting output quotas.

Currently, China accounts for 90% of rare earth refining capacity and about 70% of mined output.

Trump revives tariff threats

US President Donald Trump added fresh tension this week, warning of “200 per cent tariffs, or something” on rare earth-related products unless China guarantees magnet shipments to the US.

“They would destroy China,” Trump said during a meeting with South Korean President Lee Jae Myung at the White House, describing tariffs as “incredible cards.”

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

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 rose 3.6% in New York on Tuesday, giving the company a $13.24 billion market capitalization.