The rare earths industry experienced a challenging 2024, marked by significant price declines across key magnetic materials. This downturn eroded profits and disrupted processing margins, casting a shadow over the sector’s financial health. As we look ahead to 2025, industry experts are closely watching for signs of recovery and the factors that will shape the market’s trajectory. This article delves into the rare earth market outlook for 2025, analyzing the key trends, demand drivers, and potential wildcards that will influence prices and industry dynamics.
2024 Price Recap: A Year of Declines
The year 2024 began with a sharp drop in prices for essential magnetic raw materials. By the summer months, dysprosium oxide prices had plummeted by 30%, terbium oxide by 27%, and neodymium-praseodymium (NdPr) oxide by 17%.
Fastmarkets data illustrates this downturn vividly. The weekly price assessment for dysprosium oxide 99.5%, FOB China, fell to $230-280 per kg on July 18th, a significant decrease from $350-380 per kg on January 4th. Similarly, terbium oxide 99.99%, FOB China, dropped to $730-795 per kg on July 11th, compared to $980-1,100 per kg at the start of the year. Neodymium-praseodymium oxide 99% ratio (75:25), FOB China, also saw a considerable decline, sliding to $50-52 per kg on June 13th from $60-63 per kg on January 4th.
Throughout the summer of 2024, suppliers attempted to raise offer prices, but these efforts were consistently met with weak demand from China’s magnet sector, a major downstream consumer. A brief recovery emerged towards the end of summer, but momentum waned by October, leading to renewed price declines.
While NdPr prices experienced a partial rebound from their summer lows, reaching $55-57 per kg on December 19th, they remained down 9% from the beginning of 2024. Terbium prices, at $770-850 per kg on the same date, were 22% lower than on January 4th. Dysprosium, however, continued its downward trajectory, reaching $220-270 per kg on December 19th, a substantial 33% decrease since the start of the year.
The financial strain of these price drops was evident in the performance of rare earth producers. In 2024, only two major players, Chinese state-owned Northern Rare Earth and Australian Lynas Rare Earths, reported maintaining positive refining margins, and even they experienced significant profit reductions. Industry expert Constantine Karayannopoulos described the widespread financial losses as the rare earths industry “swimming in red ink.”
Near-Term Outlook for 2025: Navigating Uncertainty
Looking to the near-term future, expert opinions suggest continued uncertainty in the rare earth market outlook for 2025. Melvin Hill, vice president of GE Chaplin, anticipates no significant market shifts leading up to the Chinese New Year (January 28th – February 4th), but foresees potential challenges emerging after the first quarter of 2025.
Jan Giese, senior manager for rare earths and minor metals at Tradium, shares a similarly cautious perspective. “I’m pretty pessimistic for next year at this point. However, I’m not sure it has too much room to fall,” Giese noted, suggesting that while further price drops are possible, the downside may be limited.
Lynas Rare Earths, in its chairman’s address on November 27th, offered a downbeat yet open-ended assessment, stating that price volatility is likely to persist until the Chinese economy demonstrates stronger growth. This highlights the significant influence of China’s economic health, particularly its housing and construction sectors, on neodymium iron boron (NdFeB) magnet demand, as these sectors account for two-thirds of its applications.
However, some industry experts express optimism for a potential recovery later in 2025 or early 2026. Constantine Karayannopoulos believes that “by some time in 2025 or the first half of 2026 you will start to see inventories being whittled down and prices starting to increase.” He attributes the large inventory buildup in 2023 and early 2024 to weaker-than-expected magnet demand, influenced by negative consumer sentiment and geopolitical uncertainties, especially concerning EV mandates outside of China.
Magnet Demand: Growth Moderates Amidst Market Shifts
Global demand for rare earth magnets is projected to continue its growth trajectory in 2025, albeit at a more moderate pace than previously anticipated. While demand has consistently risen over the past five years, John Ormerod, head of magnetics at metal consultancy JOC LLC, suggests a revised growth outlook.
“Most experts were looking at a 9% increase by volume next year. But I think we will be closer to 5%,” Ormerod stated. He points to the state of the Chinese economy, rare material pricing, and the evolving landscape of electrified vehicles as key factors influencing this adjusted growth forecast.
A significant trend in 2024 has been the resurgence of hybrid vehicles relative to纯 electric vehicles. While both types utilize high-performance NdFeB magnet motors, hybrids typically employ motors with smaller outputs, requiring approximately one-third the amount of magnets compared to full electric vehicles. This shift towards hybrids could moderate the overall demand growth for rare earth magnets in the automotive sector.
Wildcards and Uncertainties in the Rare Earth Market
The rare earth market is inherently complex and susceptible to geopolitical and policy risks. Experts identify several “wildcards” that could significantly impact the industry in 2025.
One major concern is the situation in Myanmar. Thomas Kruemmer, founder of The Rare Earths Observer, highlights the Kachin Independence Army’s control of rare earth mining areas in Myanmar and China’s subsequent border closure. This disruption halts ammonium sulphate imports into Myanmar and rare earth exports to China. Kruemmer notes that “Chinese imports of raw materials from Myanmar were 40,000 tonnes during the first nine months of 2024. If that production drops out, there will be a big impact on [heavy] rare earth prices.” The potential supply disruption from Myanmar represents a significant risk factor for heavy rare earth prices in 2025.
However, some industry sources remain skeptical about the extent of the Myanmar situation’s impact. One source suggests that the market has already absorbed some instability from the region and that a more substantial price reaction would have been observed if the impact were truly significant. This source posits that including raw material imports in Chinese production quotas would have a far more substantial impact on supply and prices. Currently, imported rare earth raw materials are exempt from China’s refining and smelting production quotas, a factor some believe contributes to the supply-demand imbalance.
While some anticipate potential policy shifts from Chinese regulators to tighten supply and support price recovery, others deem radical policy changes as “irrational.” One industry source expects Chinese regulators to attempt to “tighten supply a bit to allow prices to rise to levels allowing more consistent profitability through the supply chain and to make sure the rare earths industry isn’t a subsidy provider to the EV industry in China.”
US Tariffs: A Potential Trade Risk
Another significant wildcard for the rare earth market outlook 2025 is the potential for increased US tariffs. Melvin Hill from GE Chaplin expresses concern that rare earths could be included in tariff lists without sufficient differentiation between different rare earth oxides. “My top concern is that rare earths will get thrown onto the tariff list and they won’t differentiate between neodymium-praseodymium oxide, which the US does produce, and neodymium oxide and praseodymium oxide, which it does not,” Hill explained. He warns that broad tariffs could cause “a lot of collateral damage” due to the complexities of HS codes and the diverse range of rare earth materials.
The prospect of new trade restrictions also raises the specter of retaliatory measures. Jan Giese from Tradium points out that China has already placed restrictions on many critical materials, leaving limited options for further retaliation.
Conclusion: Navigating a Complex Landscape
The rare earth market outlook for 2025 remains complex and uncertain. While demand growth is expected to continue, it is likely to be more moderate than previously anticipated. The market faces numerous headwinds, including the ongoing weakness in the Chinese economy, potential supply disruptions from Myanmar, and the risk of increased trade tensions. While some experts anticipate a potential price recovery later in 2025 or early 2026 as inventories normalize, the near-term outlook suggests continued volatility and pressure on producer profitability. Navigating this landscape will require careful monitoring of market dynamics, geopolitical developments, and policy changes to effectively manage risks and capitalize on emerging opportunities in the rare earth sector.
