Supply Tightness May Lead to Short-Term Fluctuations in Rare Earth Prices at High Levels [SMM Analysis]

SMM March 16 News: This week, rare earth prices generally showed a stable to rising trend, with prices of some categories remaining steady. Supply side, most industry participants generally believed that due to various factors, rare earth mining quotas would only increase by 5-10% YoY. This growth rate is evidently milder compared to the past few years.

Meanwhile, the situation of overseas rare earth supply also remained challenging. In particular, the resumption timeline for Myanmar's rare earth mines has yet to be determined, undoubtedly adding greater uncertainty to the global rare earth supply chain. With the resumption of Myanmar mines still far off, the supply of overseas rare earth ores is facing increasingly severe issues.

Demand side, emerging fields such as humanoid robots and the low-altitude economy have brought new growth opportunities to the rare earth industry, and the market valuation of rare earth permanent magnet companies is expected to rise. By 2025, the global supply-demand gap for Pr-Nd oxide is projected to reach 4,500 mt, and the improvement in the supply-demand relationship will further support the rebound in rare earth prices.

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In the short term, the supply-demand relationship in the rare earth market remains relatively balanced, which may lead to rare earth prices staying at high levels with fluctuating volatility. However, several key factors could trigger periodic market fluctuations: first, changes in Myanmar's political and economic situation may create uncertainties in rare earth supply; second, changes in the economic viability of imported ores, i.e., the relationship between costs and returns, could affect the stability of market supply; and finally, the implementation of policy control measures may have direct or indirect impacts on the market. Therefore, under the combined influence of these factors, rare earth market prices may experience some degree of fluctuation in the short term.