Rare earths prices reach an inflection point as the market heats up

The rare earths market is at an inflection point. China’s export controls on selected rare earths have driven a widening divergence between Rotterdam and Chinese price benchmarks, highlighting the market’s continued dependence on Chinese supply.

In April 2025, China introduced export controls covering selected heavy rare earths (HREEs) – such as dysprosium, terbium, yttrium and europium – and alloys containing them. Since their introduction, exports of these materials from China have fallen sharply.

China’s export controls have materially increased prices outside of the country. Whether this premium becomes a structural feature of the market will depend on three factors (discussed in more detail later in this insight):

1. The duration of the restrictions:Controls must remain in place long enough to support investment in supply outside of China.
2. The development of midstream capacity:Processing and separation capacity must be established outside of China to create an independent mine-to-magnet supply chain.
3. Willingness to pay a premium:Original equipment manufacturers (OEMs) and other consumers must be prepared to pay higher prices for non-Chinese rare earths and alloys containing them.

Public and private sector initiatives outside of China are accelerating efforts to build alternative rare earth supply chains. However, the long-term effectiveness of these measures remains uncertain, leaving the market at an inflection point with two potential outcomes:

• Price divergence: China rare earths prices sustain a significant premium to Chinese benchmarks.
• Price convergence:The e China premium gradually returns to historical levels, eliminating any material price difference when compared to Chinese benchmarks.

EXW Rotterdam heavy rare earths prices diverge from Chinese benchmark following trade restrictions

China’s export restrictions on selected HREEs have materially reduced product availability outside of the country. CRU estimates that China accounts for 99% of global HREE separation capacity and 88% of global light rare earth element (LREE) separation capacity.

Given China’s dominance across the rare earths supply chain, the sharp decline in exports of the affected materials has had a significant market impact. Exports of dysprosium and terbium, for example, were 83% lower in January 2026 than in January 2025.

China is also increasingly using rare earths as a bargaining tool in its negotiations with the US. On 9 October 2025, China issued a series of notices that expanded export controls to cover rare earths production equipment and related technologies. Although these measures were subsequently withdrawn, they underscored the vulnerability of supply chains outside of the country.

Against this backdrop, EXW Rotterdam prices for the affected rare earths have risen sharply and now trade at a premium compared to the Chinese benchmarks. The divergence is most pronounced in yttrium: EXW Rotterdam prices increased significantly in 2025 and are forecast to reach 78 times the Chinese price in 2026. Prices for other restricted rare earths have also risen notably.

Long-term price levels to remain uncertain  

Whether the split between the China and ex. China rare earths markets becomes structural will depend on the aforementioned three factors: the durability of the current trade restrictions, the development of ex. China midstream capacity, and consumers’ willingness to pay for diversified supply. These factors will determine whether the current price gap narrows towards historical levels or persists as a lasting feature of the market.

The direction of the market over the next ten to 15 years will become clearer based on how these factors evolve over the next two to three years. Developments over the past year have increasingly supported the price divergence scenario:

• Duration of restrictions:China has agreed to issue general licences to rare earths exporters to ease pressure arising from the trade restrictions. However, exports of heavy rare earths remain limited, and the flow of REEs outside of China has been slow. If this persists, OEMs are likely to increase sourcing from ex. China suppliers.
• Development of midstream capacity:Investment across the rare earths value chain has increased significantly over the past year, with a growing focus on developing integrated ex. China mine-to-magnet supply chains. If planned projects proceed, they would represent a material step towards establishing an alternative supply base. This is being supported by:

1. Industry consolidation:United States-based producers are acquiring rare earths assets, consolidating the ex. China industry and developing mine-to-magnet supply chains at scale.
2. Government support:Governments, particularly the United States, are actively supporting ex. China producers through low- or zero-interest financing, direct investment and, in some cases, price-floor mechanisms.

• Willingness to pay a premium:Several OEMs are entering into offtake agreements with ex. China producers across the value chain. These arrangements provide buyers with greater supply security while giving producers the revenue visibility needed to support investment.

CRU can help you navigate the rare earths market at a pivotal moment

Policymakers will continue to focus on rare earths due to their criticality in the energy transition and, increasingly, physical AI. Demand for magnet rare earths such as NdPr has grown by over 60% from 2020–2026. This growth is mainly an outcome of increased uptake of electric vehicles and wind turbines. In addition, humanoid robots are considered to potentially be the next big leap for AI, and as they move from concept to reality, rare earths demand will further intensify.

By 2040, CRU forecasts that the supply gap in the rare earths market will total almost a third of global demand. Due to strategic nature of magnet rare earths, we expect countries to increasingly safeguard domestic supply, further strengthening the case for price divergence.

Despite the arguments in favour of long-term bifurcation of the rare earths market, such a scenario is based on several conditions being met, as discussed earlier in this insight. It is due to this uncertainty that CRU considers the price convergence and divergence in its latest price forecasts. These price factors, along with new demand and geopolitical battles, have directed the rare earths market to its inflection point.

It is crucial that suppliers, traders, end users and financial institutions stay ahead of these fast-moving developments. CRU provides both ready-made intelligence and tailored research to help organisations anticipate change, mitigate risk, uncover opportunities, and enable well-informed, forward-leaning decisions.

In our latest rare earths special report, we discuss how trade restrictions are reshaping the market, and what future this may bring. To discover how CRU can support your strategy across the rare earths and critical metals industries, be that through pricing services, special reports, or consulting projects, please get in touch here.