China has long dominated the rare earth metals market, but its profits have recently dropped significantly. China Rare Earth Resources and Technology reported a 45.7% decline in net profit and a 5.4% decline in 2023 sales. Other Chinese manufacturers saw revenues decrease by 60-79%.
There are two reasons for the decline: China’s economic problems and other countries beginning to establish their own rare-earth supply chains, shutting out China as much as they can. China’s industry ministry admitted that its rare earths are “undersold” and “wasted” in the current competitive environment and wants stricter rules in place, including a requirement that importers and exporters comply with export control and international trade legislation as part of the nation’s attempts to preserve its market position.
All is not negative. China remains at the top of the global rare earths market and has 40% of the world’s stocks of rare earth elements, with Myanmar, Australia, Russia, and India next in line. Australia’s Lynas Rare Earths company is buckling down on prices and expenses to withstand a decline in rare earth pricing and waning demand in China. It recently announced a 74% decrease in net profit for the first half of the year, given the declining pricing for neodymium and praseodymium (NdPr), its two main products.
Lynas’ subsequent tightening of prices could negatively impact companies relying on rare earths as key product inputs. Given this, rare earth metal sourcing companies should look out for cost increases, supply chain disruptions, increased reliance on China, and challenges for clean energy transitions.
