Rare earth prices are moving fast, and the forces behind these shifts matter for anyone holding natural resource stocks. Geopolitical tensions, supply chain bottlenecks, and surging demand from clean energy are reshaping the market right now.
At Natural Resource Stocks, we’ve tracked these movements closely. This forecast breaks down where prices are headed and what it means for your portfolio.
Where Rare Earth Prices Stand Right Now
China controls roughly 91% of global rare earth refining and processing capacity, according to the International Energy Agency, handing Beijing enormous leverage over pricing and availability. In early 2026, China expanded dual-use export controls targeting allied nations like Japan, which accounts for about 15% of global advanced rare-earth magnet manufacturing.
When Japan cannot source the metals it needs, downstream manufacturers worldwide face immediate supply disruptions and price spikes. Chinese customs data reveals the volatility: rare-earth magnet exports rebounded to 5,952 metric tons in December 2025 after collapsing to just 1,239 metric tons in May 2025. Policy decisions, not market fundamentals, drive these swings. Meanwhile, ex-China rare-earth exports fell to 4,392 metric tons in December 2025, roughly 15.8% below the monthly average, signaling that supply tightness outside China intensifies. Heavy rare earths like dysprosium have effectively dried up due to dual-use restrictions, creating genuine bottlenecks for high-performance magnet applications in defense and aerospace.
Processing remains the real constraint
Mining capacity exists in several countries, but processing and refining remain the acute pinch point. Chinese refined rare-earth compounds cost five to six times less than Western equivalents, according to research from Kazuto Suzuki at the University of Tokyo. This cost advantage reflects decades of infrastructure investment and scale. The U.S. government committed $1.6 billion to USA Rare Earth, including a $1.3 billion CHIPS Act loan, to build domestic magnet capacity.
The company’s Stillwater facility comes online in the first half of 2026 to produce neodymium-iron-boron magnets for defense and aerospace. USA Rare Earth projects producing more than 10,000 metric tons annually of rare-earth magnets in 2029. U.S. demand currently sits around 50,000 tons per year and is forecast to double in 2035. However, new non-Chinese processing capacity won’t enter the market until 2027, leaving 2026 and early 2027 as a window of sustained supply tightness and price volatility.
EV and wind demand accelerates
Electric vehicle magnets are 80-90% rare earth permanent magnets, averaging 1.5 kg per vehicle. Wind turbines demand similar quantities. The global permanent magnet market expands at 8.5% annually through 2030, with EV and renewable energy applications driving the majority of that growth. Global rare earth metals markets reached US$6.4 billion in 2024 and are projected to hit US$11.3 billion in 2030, expanding at a 10% compound annual growth rate. Price premiums for high-performance magnets outside China persist through 2026 and beyond because processing bottlenecks and long-term supply assurances matter more than raw material costs.
New pricing benchmarks signal supply shifts
A European or North American pricing benchmark could emerge in the coming months to reflect different cost structures and support risk management. These benchmarks will signal whether supply diversification actually materializes or remains merely promised. Investors who track these developments gain early insight into which supply chains stabilize first and which regions face extended shortages.
What’s Driving Rare Earth Price Spikes Right Now
China’s processing monopoly sets the price floor
China controls 91% of global refining capacity, according to the International Energy Agency. This means virtually every rare earth atom destined for Western markets passes through Chinese facilities or commands a premium elsewhere. When China tightens export controls, prices spike immediately because buyers have nowhere else to turn. The U.S. Department of Defense committed roughly $400 million to MP Materials to expand processing at Mountain Pass and build a second domestic magnet plant, signaling that Washington understands processing capacity, not mining, determines pricing power. This investment won’t move the needle until 2027 at earliest. Until then, Western buyers pay whatever China demands or accept extended lead times.
The cost gap matters significantly. Chinese refined rare-earth compounds run five to six times cheaper than Western equivalents, according to research from Kazuto Suzuki at the University of Tokyo. This price differential persists because Chinese producers operate at massive scale with established infrastructure, not because Western producers lack competence. Any rare earth stock tied to processing capacity outside China commands premium valuations because supply-constrained buyers will pay to avoid Chinese dependence.
Renewable energy and EV manufacturing overwhelm current supply
Renewable energy and electric vehicle manufacturing amplify demand in ways that overwhelm current supply. A typical 100 kilowatt EV traction motor contains roughly 5 kilograms of neodymium-praseodymium and about 1 kilogram of dysprosium oxide, according to Benchmark Mineral Intelligence data. Wind turbines demand similar quantities per megawatt installed. The global permanent magnet market grows at 8.5% annually through 2030, with EVs and renewables accounting for the vast majority of that expansion.
That growth trajectory means rare earth demand doubles roughly every eight to nine years. Meanwhile, new supply outside China won’t materialize until 2027, creating a structural supply deficit through 2026 and into 2027. Neodymium oxide market projected to reach US$5.2 billion by 2030, expanding at a robust Compound Annual Growth Rate through 2030. This isn’t speculative demand; government EV mandates, renewable energy targets, and defense spending lock it in. Japan’s loss of dysprosium access due to Chinese export controls demonstrates how quickly supply disruptions cascade through downstream manufacturing. For investors, rare earth prices remain supported regardless of short-term market sentiment because the underlying demand curve is steep and rising.
Supply tightness extends into 2027
New non-Chinese processing capacity won’t enter the market until 2027, leaving 2026 and early 2027 as a window of sustained supply tightness and price volatility. Heavy rare earths like dysprosium have effectively dried up due to dual-use restrictions, creating genuine bottlenecks for high-performance magnet applications in defense and aerospace. Ex-China rare-earth exports fell to 4,392 metric tons in December 2025, roughly 15.8% below the monthly average, signaling that supply tightness outside China intensifies. Processing remains the real constraint-mining capacity exists in several countries, but refining and processing remain the acute pinch point. Price premiums for high-performance magnets outside China persist through 2026 and beyond because processing bottlenecks and long-term supply assurances matter more than raw material costs alone.
These supply dynamics create a window of opportunity for investors who position themselves before new capacity arrives. The next section examines which emerging supply sources and alternative markets offer the most realistic paths to price stabilization.
Where Rare Earth Prices Head Next
Neodymium oxide commands the highest price trajectory
Neodymium oxide will hit US$5.2 billion by 2030 according to ResearchAndMarkets, expanding at roughly 10.6% annually. This isn’t optimistic forecasting-it reflects locked-in demand from EV mandates and renewable energy targets that governments have already committed to. Dysprosium and terbium face even steeper price trajectories because heavy rare earth processing bottlenecks persist through 2027. Western buyers currently pay premiums of 30-50% above Chinese prices for guaranteed supply, and those premiums will hold until new processing capacity actually ships product, not just promises.
Western processing capacity arrives too late to relieve current tightness
USA Rare Earth’s Stillwater facility launches in the first half of 2026 and will ramp to 10,000 metric tons annually in 2029, while US demand alone sits at 50,000 tons yearly and is forecast to double in 2035. This means supply deficits deepen even as new Western capacity comes online. MP Materials received roughly $400 million in Department of Defense funding to expand Mountain Pass processing and build a second magnet facility, but neither facility meaningfully impacts pricing until 2027 at the earliest. For investors, this timeline matters enormously: macroeconomic factors and structural supply tightness persist regardless of sentiment swings through 2026 and into 2027.
Emerging supply sources take years to commercialize
Emerging supply sources outside China face a hard reality-they take years to commercialize and cost significantly more to operate. Pensana secured $100 million in strategic investment to advance mine-to-magnet plans in the US, yet even with accelerated timelines, commercial production remains years away. African deposits could contribute up to roughly 7% of global supply after 2030, but that timeline is too distant to relieve current tightness. Japan’s magnet manufacturers account for about 15% of global output, and when Chinese export controls cut off their dysprosium access, they have no alternatives except paying Western suppliers at inflated rates. This cascades through automotive supply chains globally.
Position into near-term processing capacity with government backing
Investors should position heavily into companies with near-term processing capacity coming online, particularly those with government backing that reduces execution risk. USA Rare Earth and MP Materials represent the most concrete plays because they have committed capital, government contracts, and defined timelines rather than exploratory upside. Neodymium-praseodymium oxide commands the highest margin potential because EV motors demand 1-3 kilograms per vehicle and that requirement grows with every new EV sold. Monitor which companies secure long-term supply contracts with automakers and defense contractors, as those agreements signal confidence in reliable supply and justify premium valuations. A European or North American pricing benchmark could emerge within months to reflect regional cost structures, and whichever companies anchor those benchmarks early gain pricing power and customer loyalty that extends far beyond commodity cycles.
Final Thoughts
Rare earth prices will remain elevated through 2026 and into 2027 because supply constraints are structural, not cyclical. China’s 91% control of global refining capacity combined with new dual-use export restrictions means Western buyers face a genuine shortage window before alternative processing capacity materializes. Neodymium oxide will reach US$5.2 billion by 2030 at roughly 10.6% annual growth, driven by locked-in EV mandates and renewable energy commitments governments have already made.
For natural resource stock investors, this rare earth prices forecast points toward a clear positioning strategy. Companies with near-term processing capacity backed by government funding offer the most concrete returns because execution risk is lower and timelines are defined. USA Rare Earth and MP Materials represent the most tangible plays, not exploratory upside, and whichever firms secure long-term supply contracts with automakers and defense contractors will justify premium valuations.
Geopolitical fragmentation of the rare earth supply chain creates sustained pricing support regardless of short-term market sentiment. Investors who understand this timeline and position accordingly before new capacity arrives will capture outsized returns. We at Natural Resource Stocks track these developments continuously through expert analysis and market insights that help you navigate shifting supply dynamics.
