China's rare earth prices are likely to stay under pressure for most of 2025 because of supply outpacing demand and continued project expansions outside China.

NdFeB output rises

China's output of neodymium-iron-boron (NdFeB) magnets is expected to rise to around 300,000t in 2024, up by 7pc against 280,000t the previous year, according to data from the magnet branch of China's rare earth industry association (Acrei).

China's production of cerium-iron-boron (CeFeB) magnets has maintained growth over the past few years, driven by comparatively lower selling prices and improving performance. The output of CeFeB magnets rose to around 90,000-100,000t in 2024 against 80,000t in 2023, Acrei added.

But increased demand for cerium metal following output spikes in CeFeB magnets has weakened demand growth of praseodymium-neodymium metal feedstock. Market participants told Argus that a major electric vehicle (EV) plant has decided to use more CeFeB as its main feedstock instead of NdFeB in EV manufacturing to cope with a severe squeeze in profit margins caused by consecutive falls in EV sales prices and higher NdFeB prices.

Rare earth in surplus

China's consumption of praseodymium-neodymium metal and oxide was estimated to have reached around 80,000t and 96,000t, respectively, in 2024, while China's annual output of metal and oxide was at around 88,000t and 106,000t in the year, according to market participants.

The medium and heavy rare earth surplus, particularly dysprosium and terbium, has shown no signs of easing and the oversupply is projected to widen further in 2025. China's output of terbium oxide is expected to rise by 12pc on the year to around 650t in 2024, while metal production is likely to fall by 16pc to 380t in the same period because of output curbs across more metal plants, said some market participants.

China's output of dysprosium oxide is expected to rise by 12pc on the year to around 3,500t in 2024, with ferro-dysprosium rising by 15pc to around 2,100t in the period. The market is estimated to have a supply surplus of over 1,000t of dysprosium oxide and more than 200t of terbium oxide in 2024.

China's exports of dysprosium oxide fell from 162t on the year to 125t during January-October 2024, with exports of terbium oxide dropping to 72t from 89t in the period. This was primarily because of reduced demand from Japan, South Korea and Russia. Japan was the largest buyer of dysprosium and terbium oxide, accounting for around 60pc and 86pc of China's total exports, respectively.

Overseas project expansions

Argus estimates that the total production capacity of rare earth mining outside China has reached 130,000 t/yr of rare earth oxide (REO).

Rare earth mining capacity operated by Australian rare earths firm Lynas and US-based rare earths producer MP accounts for over 70pc of overseas total volumes.

The output capacity of rare earths separation outside China has hit over 70,000 t/yr and output expansions from Lynas and MP will continue in 2025. Lynas' plan to start its first production of separated dysprosium and terbium at its Malaysia extraction facility in the 2025 fiscal year is more likely to erode China's export share and exert downward pressure in the medium and heavy rare earths market.

Australian mineral producer Iluka Resources plans to achieve an output capacity of up to 23,000 t/yr of rare earth oxide, including 5,500 t/yr of neodymium-praseodymium oxide and 725 t/yr of dysprosium and terbium oxide from its refinery in Australia.