Pr-Nd Oxide Price Outlook: Upstream Cost Support vs. Downstream Caution【SMM Analysis】

SMM January 12: In early January 2026, the domestic Pr-Nd oxide market price showed a rapid rising trend, with offers climbing to 640,000 yuan/mt, up by about 30,000 yuan/mt from before New Year's Day. The price increase resulted from cost support, tight supply, and market sentiment, but weak downstream demand also limited further upside room. The market is expected to enter a phase of fluctuating at highs.

The direct driver of the price increase stems from cost support at the uppermost upstream level and tightening supply expectations. In early January, industry leader Bao Gang United Steel announced that, in accordance with its established price adjustment mechanism, it set the related-party transaction price for rare earth concentrate supplied to China Northern Rare Earth in Q1 2026 at 26,834 yuan/mt, excluding tax, up 2.4% QoQ. This news, combined with expectations of a persistently tight rare earth supply landscape, significantly bolstered bullish sentiment in the rare earth market, further driving up offers from upstream enterprises amid strong reluctance to sell and a prevailing bullish outlook.

However, the price rally is facing a severe test from the demand side. The current rapid price surge is primarily driven by supply-side news and sentiment, but the underlying demand support remains weak. Most downstream magnetic material and end-use application enterprises have limited acceptance of this round of high prices, with purchasing behavior turning cautious—largely relying on inventory consumption or adopting a wait-and-see approach, resulting in a noticeable lack of follow-through in new orders. This situation of "upstream calling for hikes while downstream waits and watches" has led to intense back-and-forth negotiations between upstream and downstream. Furthermore, from the perspective of end-use sectors, given the broad-based surge in costs of various raw materials, it is difficult for motor enterprises to fully absorb the rapid rise in raw material prices in the short term through their order intake.

Overall, the Pr-Nd oxide market is currently in a state of tension between strong cost support and weak demand reality. Upstream ore price increases and expectations of tight supply have limited the room for significant price declines, but sluggish downstream demand also restricts the possibility of unlimited price surges. Therefore, the market generally expects that Pr-Nd oxide prices will struggle to sustain a one-sided rapid upward trend in the short term and are more likely to fluctuate within a certain high range. Future price movements will depend on the extent of downstream stockpiling demand before the Chinese New Year and further developments in macro factors such as global supply chain policies.