Key facts
- Rare earth stocks are down despite rising commodity prices.
- Ex-China NdPr prices are up 23% year-to-date.
- Rare earth developers are down 17% and producers 28% on average.
- Western prices for heavy rare earths show significant premiums over Chinese prices.
- Japan faces a potential yttrium shortage by year-end.
- Global NdFeB magnet demand is forecast to grow significantly, driven by EVs, data centers, e-bikes, scooters, and drones.
Rare earth stocks are underperforming despite rising commodity prices, a disconnect attributed by Canaccord's critical minerals team to global macro factors rather than market fundamentals. While ex-China NdPr prices have risen 23% year-to-date, rare earth developers are down 17% and producers 28%. This divergence is seen as the commodity acting as a strategic asset while stocks trade as risk-off casualties.
Washington's move to underwrite Western supply economics with price floors for key rare earths like NdPr, dysprosium, and terbium has stabilized Chinese pricing. However, Western markets for heavier rare earths, such as yttrium, gadolinium, and samarium, show significant premiums over Chinese prices due to supply rationing. Japan is particularly concerned about an impending yttrium shortage.
Demand for rare earths is projected to grow, driven by electric vehicles, data centers, drones, and robots. Canaccord forecasts a global NdPr market deficit through 2028, with deficits expected to deepen by 2035. Despite planned increases in Western magnet capacity, China is expected to maintain a dominant share of global capacity, particularly in metallization and alloying.