Highlights

• Pr-Nd oxide and alloy prices surged to 19,500-22,500 yuan/mt by year-end, driven by policy expectations and sentiment rather than physical supply tightening.
• Finished NdFeB magnet prices stagnated or dropped.
• Magnet manufacturers face severe margin compression as rising input costs cannot be passed through due to slowing demand from new energy and wind sectors, and saturated inventories from panic stockpiling.
• This price-up, volume-down market represents a stress test rather than growth; upstream pricing strength does not translate to downstream profitability until end-use demand reaccelerates.

---

Shanghai Metals Market reports (opens in a new tab) a sharp year-end surge in NdFeB raw materials, with Pr-Nd oxide at 593,500 yuan/mt (+19,500 WoW) and Pr-Nd alloy at 720,000 yuan/mt (+22,500 WoW). Prices spiked quickly, then settled into a volatile plateau at elevated levels. Yet finished magnet prices failed to follow—and in some cases were cut to move inventory. The result is a familiar rare-earth paradox: strong inputs, weak outputs.

What matters most is why the rally stalled. SMM attributes the move primarily to policy expectations and market sentiment, not a sudden tightening of physical supply. That distinction is critical. Sentiment can lift prices briefly; fundamentals determine margins.

Rare Earth Exchanges™ Take

Rare earth materials are essential for products like electric cars, wind turbines, and electronics, and their prices jumped sharply at the end of the year. However, while the cost of raw rare earth materials rose quickly, the prices of finished magnets did not—and some manufacturers even lowered prices to make sales.

This happened because the price spike was driven more by government policy expectations and market anxiety than by real increases in demand. Demand from industries like renewable energy slowed, inventories became overfilled, and buyers grew cautious. As a result, companies making magnets are being squeezed: their costs are high, but they can’t charge more. In simple terms, prices are up, sales are down, and profits are under pressure—making this market a test of survival rather than a sign of strong growth.

When the Gears Don’t Mesh

On mechanics, SMM is largely right. A policy-constrained undersupply of certain rare earth feedstocks within China has supported prices through 2025. But end-use demand weakened across key sectors. The price-transmission mechanism broke: raw materials rose; magnets didn’t. This is exactly what supply-chain operators report on the ground—cost pressure without pricing power.

The annual timeline also holds. Export controls and China–U.S. trade frictions disrupted production planning early in the year. April’s tightening cooled transactions; summer brought a modest rebound. Panic stockpiling around October–November—triggered by export licenses and diplomatic signals—pulled forward demand. December then revealed the hangover: saturated inventories, cautious buyers, and shrinking new orders.

The Part That Hurts

The downstream slowdown is where the pain concentrates. New energy and wind power demand did not collapse—but growth decelerated enough to matter. That nuance is decisive. High prices are being sustained by supply discipline, not by accelerating consumption.

For magnet manufacturers, the squeeze is relentless: rising input costs, flat selling prices, and narrowing margins. Framing the rally as “undersupply plus sentiment” is accurate—but it risks understating how fragile profitability becomes when demand is merely less bad, not strong.

This is a price-up, volume-down market. Panic buying will not rescue margins. Liquidity management and timing now matter more than throughput. For investors, the signal is unambiguous: upstream pricing strength does not equal downstream health. Until end-use demand reaccelerates—or supply tightens materially—magnet producers will struggle to pass through costs.

Bottom line: prices can stay high while profits stay thin. That’s not a bull market. It’s a stress test.

Citation: Shanghai Metals Market (SMM), Material Prices Hold Firm at Highs, Panic Buying Fails to Offset Poor Year-End Sales, Dec 25, 2025.

© 2025 Rare Earth Exchanges™ – Accelerating Transparency, Accuracy, and Insight Across the Rare Earth & Critical Minerals Supply Chain.