The supply constraints for rare earths are intensifying due to quota restrictions and declining imports, while stricter tax policies are keeping scrap recycling operations at low capacity. As industrial chain participants restock for essential needs and the peak season approaches, demand is expected to recover. Emerging sectors like robotics, the low-altitude economy, and industrial motors are projected to unlock long-term growth potential, potentially leading to a sustained tight supply-demand balance. Under this price uptrend, mid-year financial reports for rare earth chain companies may exceed expectations, reinforcing the strategic value of this sector.
A review of the market shows the CITIC SEC Rare Earth and Magnetic Materials Index fell 13.2% over the week and 26.5% for the month as of July 17, 2026, landing at 3293.0. The index has declined 7.3% year-to-date. In comparison, the broader CITIC SEC Nonferrous Metals Index dropped 7.3% weekly and 19.5% monthly, with a year-to-date loss of 14.1%. The CSI 300 Index fell 5.3% over the week and 8.2% for the month, down 4.0% since the start of the year.
Prices for both light and heavy rare earths have risen over the past month. According to the Chinese Rare Earth Industry Association, as of July 17, 2026, the price of dysprosium oxide, a key heavy rare earth product, stood at 1.405 million yuan per ton, up 0.4% monthly and 6.4% year-to-date. Terbium oxide reached 6.855 million yuan per ton, increasing 7.1% from the previous month and 15.3% from the start of the year. Among light rare earth oxides, praseodymium neodymium oxide was priced at 755,000 yuan per ton, rising 6.1% month-over-month and 26.4% year-to-date. Neodymium oxide cost 805,000 yuan per ton, up 3.1% monthly and 33.9% annually, maintaining the upward trend for praseodymium neodymium oxide.
In June 2026, China's rare earth ore imports totaled 6,014.0 tons, a 27.7% year-on-year decline and a 6.9% drop from the previous month, according to customs data. The average import price was $20,656.0 per ton, down 8.8% year-on-year but up 23.9% month-on-month. For the first half of the year, cumulative imports reached 51,981.1 tons, a 7.0% decrease compared to the same period last year, while the cumulative import price rose 35.7% to $21,228.9 per ton.
Looking at the fundamentals, supply-side rigidity is strengthening. Recent suspensions at some raw ore separation plants, coupled with persistently low operating rates at scrap recyclers, have tightened the supply of praseodymium neodymium oxide. The rainy season in Southeast Asia has further reinforced supply constraints. On the demand side, downstream magnet producers are primarily restocking to meet essential needs. As the industry gradually enters the peak season, the supply-demand balance for rare earths is expected to continue improving, likely stabilizing and pushing prices higher.
Overseas rare earth projects are mostly in early stages. According to Shanghai Metals Market, drilling has begun at Greenland's Ilua rare earth mine, which has a total rare earth oxide grade of 2.3%. The North Karl rare earth project by Leading Edge Materials has received approval, with a TREO grade of 0.5% and an annual capacity of 5,340 tons of REO. Carester of France plans to build a rare earth separation plant in Malaysia with a capacity of approximately 13,000 tons annually. Lynas is partnering with JS Link of South Korea to construct a rare earth permanent magnet factory in Malaysia, with a capacity of about 3,000 tons. Hastings has updated the final feasibility study for its Yangibana rare earth project, with Stage 1 projected to produce 37,000 tons of concentrate per year at a cash operating cost of $20.75 per kilogram of TREO concentrate.
From a policy standpoint, the implementation of the Rare Earth Management Regulations in October 2024 has ushered the industry into a new era of high-quality, standardized development. According to the Ministry of Commerce, China will suspend certain export controls announced on October 9, 2025, for one year. Import data shows a month-on-month decline in rare earth ore imports for June 2026. Demand from downstream sectors like new energy vehicles, consumer electronics, variable frequency air conditioners, and wind power is expected to continue rising, while emerging fields such as robotics, the low-altitude economy, and industrial motors offer long-term growth potential. The rare earth industry is likely to maintain a tight supply-demand balance, driving the rare earth permanent magnet sector upward. With prices rising, mid-year reports for rare earth chain companies may exceed forecasts, reinforcing the strategic value of the entire chain. The industry maintains a "stronger than the market" rating.
Key risks include slower-than-expected commercialization of humanoid robots, faster-than-expected overseas rare earth expansion, weaker downstream consumer demand, significant price volatility, and insufficient enforcement of policies targeting illegal mining and environmental protection.
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