Riding the rare earths rollercoaster: Outlook strong despite volatility

• After making global mainstream headlines last year, it feels like some of the heat has come out of the rare earths market this year
• Analysts from BMO reckon the short-term outlook is volatile but longer term, the future looks bright
• ASX-listed rare earths companies like Critica are continuing to advance projects

Rare earths equities have been going through a tough period for much of 2026.

It feels like a lifetime since rare earths were making global headlines due to US President Donald Trump’s pursuit of Greenland, thrusting miners into the spotlight.

It’s been a year since Trump and Australian Prime Minister Anthony Albanese signed a critical minerals agreement in Washington D.C.

While the headlines gave the sector a boost in 2025, it’s been much harder to maintain momentum in 2026.

Australian sector leader Lynas Rare Earths is down 45% over the past 12 months, despite higher prices.

BMO Capital Markets analyst Max Yerrill attributed global weakness in rare earths stocks to China delaying rare earth magnet export restrictions to the US from November until January 2027.

“Our base case assumes that the US and China are unlikely to reach a deal on rare earth magnets,” he said. 

“However, China’s willingness to continue negotiating with the US, as evidenced by the recent export restriction delay, suggests a greater probability that a deal could be achieved, in our view.

“As a result of the delay, rare earth equities have sold off, reflecting growing concerns that the security-of-supply premium embedded in many Western rare earth valuations could ultimately erode if the US and China reach a deal, in our view.” 

Canaccord Genuity head of research Reg Spencer said equities had disconnected from market fundamentals, and the firm sees value in equities.

“Given our favourable supply-demand outlook, floor pricing, recent pricing stability and Western pricing premiums (particularly for heavies), we think recent equity performance has been driven more so by global macro factors and highlights a disconnection from rare earth market fundamentals,” he said. 

The outlook

Canaccord this week updated its modelling and expects neodymium magnet demand to increase at a compound annual growth rate of 7% to 365,000 tonnes by 2035, a 15% increase to its previous forecast.

“This is driven primarily by EVs, renewables, personal mobility and emerging growth segments such as robotics, drones and data centres,” Spencer said.

He said government support for projects outside China could balance the market from 2028 to 2030.

“This is mirrored in heavy rare earths where Chinese export controls/Western pricing premiums have incentivised plans for new Western separation capacity,” he said. 

“Longer-term, we continue to forecast deficits in both markets given demand growth from existing and emerging segments (i.e. humanoid robotics) and challenges facing Western supply.”

Neodymium magnet capacity outside of China is forecast to surge by more than 300% by 2030, though China would still likely control around 75% of the rare earths market by 2035, down from well over 90% currently.

“We see numerous challenges facing the West’s objective of achieving independence from China, including mismatches between planned mine supply and oxide separation, and significant shortfalls in metallisation/alloying,” Spencer said. 

“Our research points to China maintaining market dominance, with shortfalls in Western supply (and likelihood of ongoing Chinese export controls) supporting bifurcated markets and pricing premiums (most evident in heavy rare earths).”

What about pricing?

Spencer notes that the implementation of floor pricing for Western projects has had a noticeable effect on neodymium-praseodymium pricing, with Chinese pricing stabilising at around the US$110 per kilogram level. 

There are still strong premiums for dysprosium and terbium oxide prices outside China, though given limited Western production, Spencer questioned the sustainability of current pricing.

“While we suspect premiums will incentivise investment in heavy rare earth-enriched projects, we remain cautious of the impacts of high pricing on demand, with some magnet makers already pivoting towards the production of lower cost ferrite magnets (which don’t require dysprosium or terbium),” he said.

Canaccord has updated its price deck for rare earths.

“Given the scarcity of ex-China supply of heavy rare earths, we expect Western premiums to remain in place for the near term,” Spencer said. 

“Our longer-term forecasts are predicated on successful delivery of ex-China refined supply.”

NdPr prices are expected to average US$110/kg this year, up from US$69/kg last year.

Pricing is expected to peak at US$125/kg next year before dropping back to US$110/kg from 2028 until 2031.

Dysprosium prices have surged from US$240/kg last year to a forecast average of US$600/kg this year and are expected to increase further to US$700/kg next year, before dropping back to US$400/kg until 2031.

Terbium outlook is even more volatile with 2026 prices expected to average US$2563/kg, up from US$950/kg last year.

Prices are expected to further increase to US$3500/kg in 2027 before retreating to US$1700/kg from 2028 until 2032.

“For all four magnet rare earths, we have pricing peaking through 2026-27, before settling from 2028 as new supply enters the market,” Spencer said. 

“We model long-term NdPr pricing of US$130/kg (from 2032), Dy pricing of US$550/kg (from 2033) and Tb pricing of US$2100/kg (from 2033).”

New ex-China supply

Earlier this week, Critica (ASX:CRI) wrapped the first economics around its Jupiter rare earths project in Western Australia.

With a resource of 1.7 billion tonnes at 1700 parts per million total rare earth oxide, Jupiter is Australia’s largest clay-hosted rare earths deposit.

The scoping study into an 8Mt per annum open pit development returned a post-tax net present value (8% discount rate) of $2 billion, internal rate of return of 48.4% and payback period of roughly two years on the estimated pre-production capital of $556 million.

The study was based on pricing of US$146.56/kg for neodymium, US$151.43/kg for praseodymium, US$978.77/kg for dysprosium, US$3550.41/kg for terbium and US$793.31/kg for yttrium. 

That equates to a gross mixed rare earth carbonate basket price of US$52.80/kg, or US$39.60/kg, based on 75% payability. 

“We don’t simply see this as a commodity pricing story,” Critica CEO Jacob Deysel said. 

“This is a structural supply and demand chain security story.”

Critica is targeting first production from Jupiter in 2032.

“So, we’re not applying today’s spot prices and we don’t think that’s appropriate yet,” Deysel said. 

“We are actually applying an average independent Argus price deck here, which is an average over 2026 to 2040, in 2026 real dollars, and that’s how that basket price was made up. 

“And then further to that, we apply a 75% payability to that, so we think in terms of the pricing deck, that’s quite conservative.”

Deysel said Western governments and customers weren’t just focused on price, but on security, diversity and custody of supply.

“We don’t assume that today’s elevated ex-China prices will continue indefinitely, and that’s why we’ve chosen the price deck as we have,” he said. 

“But at the same time, yeah, we don’t believe that today’s China domestic price necessarily represents the appropriate long-term value for secure, non-Chinese supply chains.”

Deysel said that with the West’s rare earths supply chain still being relatively fragile, projects like Jupiter had an important role to play.

“We see demand across defence, AI, data centres, advanced manufacturing, electrification, and of course, all of this feeds into modern technology,” he said. 

“And increasingly, the issue is not about the access to these commodities; it’s about custody of supply.”

At Stockhead we tell it like it is. While Critica is a Stockhead advertiser, the company did not sponsor this article. 

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