Policy Support Combined With Major Manufacturers' Bidding Pushes Pr-Nd Oxide to Over a One-Year High: Can Rare Earths Continue to Rise? [SMM Commentary]

SMM February 25 News:

Driven by the favorable policy of the Ministry of Industry and Information Technology (MIIT) soliciting public opinions on the "Interim Measures for the Total Volume Control and Management of Rare Earth Mining and Smelting Separation (Draft for Public Comments)" and the considerable quantity and price of tenders from major magnetic material manufacturers, suppliers were reluctant to sell at low prices. The spot price of Pr-Nd oxide rose for two consecutive trading days, with the current average price reaching 450,000 yuan/mt. This average price marks a new high since December 28, 2023. After hitting a new high in over a year, how will the rare earth market perform in the future?

Both Pr-Nd Oxide and Pr-Nd Alloy Average Prices Hit Over One-Year Highs

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After the holiday, the price center of rare earths has shifted significantly upward overall. According to SMM quotations, for Pr-Nd oxide: on February 25, Pr-Nd oxide was quoted at 449,000–451,000 yuan/mt, with an average price of 450,000 yuan/mt, up 2,500 yuan/mt or 0.56% from the previous trading day. After two consecutive trading days of increases, its average price has risen to 450,000 yuan/mt, marking a return to this level for the first time since its average price of 452,000 yuan/mt on December 28, 2023, over a year ago. For Pr-Nd alloy: on February 25, Pr-Nd alloy was quoted at 549,000–553,000 yuan/mt, with an average price of 551,000 yuan/mt, unchanged from the previous trading day. The average price of 551,000 yuan/mt for Pr-Nd alloy is also its highest since its average price of 552,500 yuan/mt on December 12, 2023.

It is reported that in the spot market, the tight supply of raw materials has not yet eased. Coupled with the market's favorable expectations for the introduction of new rare earth mining regulations, many suppliers anticipate that the rare earth market will continue to face tight supply, leading to firm quotations from suppliers who are unwilling to sell at low prices. On the demand side: the considerable quantity and price of tenders from major magnetic material manufacturers have provided some support to the market. However, some downstream enterprises are concerned about the possibility of spot rare earth prices jumping initially and then pulling back, and the high prices significantly narrowing their profit margins. As a result, downstream enterprises mainly make just-in-time procurement and avoid large-scale purchases.

Outlook

Currently, upstream and downstream enterprises remain in a state of observation and negotiation, with the market awaiting the release of the first batch of rare earth mining quotas for 2025. In the absence of significant changes in the supply-demand relationship and new favorable policies, rare earth prices are expected to fluctuate rangebound in the near term amid the tug-of-war between upstream and downstream players.