Demand for rare earths is currently weak due to oversupply, leading to falling prices for the 17 minerals used in various technologies. China, the largest producer of rare earths, saw a 7.5% increase in exports in the first seven months of 2024, although prices continued to drop and are at their lowest in over three years. The oversupply is evident with a London-based buyer receiving numerous offers, indicating difficulty in finding buyers. Prices for dysprosium oxide and terbium oxide have declined significantly this year, with a 32% and 26% decrease respectively.
Analysts predict that the oversupply of dysprosium and terbium within China may be due to local magnet makers reducing their consumption of these materials to cut production costs. Prices of neodymium oxide and praseodymium oxide have also decreased by around 15% in 2024. China is expected to reduce the growth in its rare earths mining quota this year after a significant increase of 21.4% in 2023. Price fluctuations in July were attributed to market expectations of Beijing buying rare earths for state stockpiles, which did not materialize.
The poor demand outlook is reflected in the lack of optimistic consumption areas apart from new energy vehicles, according to a China-based rare earth magnet producer. A rare earths processor from Jiangxi province in China predicts market stabilization after October, attributing recent weakness to a rush to sell before national security regulations come into effect on Oct. 1. Despite rising demand from the electric vehicle sector, oversupply remains a significant issue within the rare earths market.
Producers like China Northern Rare Earth, China Rare Earth Resources and Technology, MP Materials, and Lynas Rare Earths have suffered from declining prices, impacting profits and revenues. Analysts suggest that many producers are operating at a loss and stockpiling supplies in anticipation of better market conditions in the future. Although the current situation is challenging, there is optimism that demand for rare earths will eventually increase, especially in long-term growth sectors like energy transition and renewable energy technologies.
In conclusion, the rare earths market is currently experiencing oversupply, leading to falling prices and challenging conditions for producers. China’s dominance in rare earth production has contributed to the abundance of supply, while demand remains weak in most areas except for new energy vehicles. Despite the current difficulties, there is hope for future demand growth in sectors like EVs and wind turbines, which could lead to a recovery in the rare earths market. Producers are adjusting their strategies to cope with the current situation and are looking towards long-term sustainability in the industry.
