Rare Earths
Asian Metal / SMM
Seventeen elements nobody can pronounce, refined almost entirely in one country, sitting inside every motor, missile, and wind turbine the other countries want to build.
Top Producers
share of 2025 mine production (REO)
Top Consumers
share of 2025 processing and magnet demand
Main Uses
share of 2024 rare earth demand by end use
Top Exporters
share of rare earth trade by contained oxide; China dominates finished products while Myanmar ships heavy rare earth feedstock into Chinese separators
Top Importers
share of rare earth oxide and magnet imports; Japan is the largest buyer of Chinese material, ahead of the US and the EU
Global mine production
roughly 390,000 t REO
as of 2025
China share of mining
roughly 70%
as of 2025
China share of refining and separation
roughly 90%
as of 2025
China share of sintered magnet output
roughly 90%
as of 2025
Magnet share of demand
roughly 40% by volume, majority by value
as of 2025
US DoD floor price for MP Materials NdPr
$110/kg
as of July 2025
The rare earths are 17 chemically similar elements: the 15 lanthanides plus scandium and yttrium. They are not geologically rare, but they occur mixed together at low concentrations and separating them is a filthy, capital-intensive chemical business that the West largely abandoned in the 1990s and China perfected. The money is in magnets: neodymium and praseodymium (traded together as NdPr oxide), boosted with dysprosium and terbium for heat resistance, make the NdFeB permanent magnets inside EV motors, wind turbine generators, hard drives, fighter jets, and guided munitions. China mines roughly 70 percent of world output, performs roughly 90 percent of separation and refining, and manufactures roughly 90 percent of sintered magnets. The only significant western producers are MP Materials at Mountain Pass, California, and Australia's Lynas, which separates in Malaysia and is building capacity in Texas.
The market's defining precedent came in September 2010, when China halted rare earth shipments to Japan during the Senkaku Islands trawler dispute. Prices rose as much as tenfold within a year, dysprosium more, governments panicked, Molycorp and Lynas were financed into existence, and Japan built stockpiles through JOGMEC. The spike collapsed almost as fast once China relaxed quotas, and a 2014 WTO ruling forced their formal removal, but the lesson held: rare earth supply is a policy variable. In April 2025 China proved it again, imposing export licensing on seven medium and heavy rare earths and on finished magnets in response to US tariffs. Magnet shipments stopped for weeks, western auto plants idled, and the controls were expanded in October 2025. After a trade truce with Washington, China suspended the October expansion for one year in November 2025, while the April 2025 licensing regime stayed in force with general licenses issued to selected exporters, the position that still held as of June 2026.
There is no exchange contract of any consequence. Prices are assessments published by Asian Metal, Shanghai Metals Market (SMM), and Argus, quoting NdPr oxide, dysprosium oxide, and terbium oxide mostly in yuan per tonne with USD equivalents, and most physical volume moves under term contracts and offtakes tied to those assessments. The western policy response escalated sharply in July 2025 when the US Department of Defense took a large equity stake in MP Materials, guaranteed a $110 per kg floor price for NdPr oxide, roughly double the prevailing Chinese price, and committed to offtake from a new magnet plant. A two-tier market, Chinese price and western strategic price, is now openly forming.
How It Trades
| Venue | No meaningful exchange market. Physical trade is bilateral, priced against assessments from Asian Metal, Shanghai Metals Market (SMM), and Argus; China's state-influenced Baotou exchange publishes domestic prices |
| Benchmark contract | NdPr oxide (praseodymium-neodymium oxide, 99 percent min) assessments, quoted in yuan per tonne in China with USD per kg equivalents; dysprosium and terbium oxide assessments for the heavies |
| Contract size | No standard lot: physical deals are negotiated by the tonne of oxide or metal; term offtakes run to thousands of tonnes per year |
| Price terms | USD per kg (or CNY per tonne) of separated oxide, ex-works China or CIF major ports |
| Settlement | Bilateral physical settlement under term contracts indexed to PRA assessments; no cash-settled futures of consequence as of 2025 |
| Typical curve | No traded forward curve; forward pricing exists only inside offtake agreements and government floor-price deals such as the 2025 MP Materials arrangement |
| Liquidity | The thinnest market in this handbook: a few large producers, a few dozen meaningful buyers, and assessment prices that can move double digits on a single policy headline. Hedging is done with equity proxies (MP, Lynas) and contract structure, not derivatives. |
Where It Trades
approximate split of financial and physical volume, 2025; there is no liquid futures market, so these markets are far less liquid than oil or base metals
Supply and Demand
Top producers
- China: roughly 270,000 t REO mined in 2025, roughly 70 percent of world output, plus roughly 90 percent of separation and magnet making
- United States: roughly 51,000 t REO, mostly from MP Materials' Mountain Pass mine in California
- Australia: roughly 29,000 t, led by Lynas' Mt Weld
- Myanmar: roughly 22,000 t, the key source of heavy rare earths (dysprosium, terbium), shipped to Chinese separators
- Nigeria, Thailand, India, Madagascar: smaller and variable volumes
Mining concentration understates the problem: nearly all ore, including American ore for most of the past decade, has been separated and refined in China. Heavy rare earths are the acute vulnerability, since the Myanmar-to-China ionic clay supply chain has no western equivalent at scale.
Top consumers
- China: the dominant consumer, home to roughly 90 percent of magnet manufacturing
- Japan: the largest non-Chinese magnet and motor industry (Shin-Etsu, Proterial, TDK)
- United States and Europe: EV, wind, defense, and electronics demand, mostly imported as finished magnets
Major uses
- NdFeB permanent magnets (EVs, wind turbines, electronics, defense): roughly 40 percent of volume and the large majority of value
- Catalysts (petroleum refining FCC, automotive): roughly 20 percent
- Polishing powders, glass, phosphors, metallurgy, batteries (lanthanum, cerium): the remainder
Demand splits sharply by element: NdPr, dysprosium, and terbium are scarce and strategic, while lanthanum and cerium are produced in surplus as inevitable co-products and often sell near cost.
What Moves the Price
- Chinese export policy: the April 2025 licensing regime and its successors are the single largest price variable
- Chinese domestic production quotas, issued to state-owned groups and adjusted twice a year
- EV and wind turbine build rates, the main sources of magnet demand growth
- Myanmar supply disruptions (conflict, mine closures), which hit dysprosium and terbium hardest
- Western capacity buildout: MP Materials and Lynas separation and magnet plants, and the price floors behind them
- Defense procurement and stockpiling in the US, Japan, and the EU
- Substitution and thrifting: magnet-free motor designs and heavy-rare-earth-lean magnet chemistry
- US-China trade negotiations, which have repeatedly traded rare earth license approvals against tariff relief
Moments That Made the Market
2010
China halts rare earth shipments to Japan during the Senkaku dispute; prices spike as much as tenfold over the following year
2012
US, EU, and Japan file a WTO case against Chinese export quotas; Molycorp and Lynas ramp new supply into a collapsing price
2015
China removes export quotas after losing at the WTO; Molycorp files for bankruptcy
2017
MP Materials acquires Mountain Pass out of bankruptcy and restarts mining
2022
NdPr oxide peaks at roughly $175/kg during the EV demand surge, then halves as Chinese quotas expand
2023
China restricts gallium and germanium exports, rehearsing the critical-minerals playbook on smaller elements
2025
China imposes export licensing on seven heavy and medium rare earths and magnets in April, expands controls in October, then suspends the October expansion for one year in November under a trade truce; the US DoD takes a stake in MP Materials in July with a $110/kg NdPr floor price
What Changed Since the 2010 Handbook Era
- In 2010 rare earths were an obscure chemicals niche with no published benchmarks most traders had ever seen; the China-Japan embargo that September made them a national security issue overnight
- The 2010 spike financed a western mining revival, the 2015 crash bankrupted it, and the 2025 export controls financed it again, this time with government equity and price floors instead of stock promotion
- Export licensing replaced export quotas as China's control instrument, harder to challenge at the WTO and aimable at specific countries and end uses
- Permanent magnets shifted from a component cost line to the acknowledged chokepoint of electrification and defense supply chains
- A two-tier price structure emerged: assessed Chinese market prices on one side, western strategic floor prices (the 2025 MP Materials deal at $110/kg NdPr) on the other