Hi
@EddyMoney87the NdPr market is super difficult to price forecast because it is manipulated by China.
but it is clear that we will have a two tier pricing structure moving forward. China and Ex-China.
currently ex-China is about 10-12% of global supply. And only significant new supply is ARU in 2028. Lynas and MP could ramp up a little. MP more so.
there is very little info on exactly where the ex-China supply goes. But since it comes mainly from Lynas we can assume a large chunk of it goes to Japan. (Who funded Lynas to get FID years ago).
and these US tariffs will then add another 40% of demand in 2026 (with almost no ability for ex China supply to grow). So that is a massive tailwind to the ex China NdPr price.
actually. Now that I have thought about it more, the tariffs come in on 2026. So the auto makers will need to start now to buy NdPr. So their engines will be compliant in 2026.
A $50k EV with a 25% tariff on an EV with China supplied NdPr…becomes a $65k EV. The amount of NdPr in a car is about currently $200 (2kgs x $100 /kg). So in theory, the manufacturer could pay up to ($15,000/2 = $7,500 per Kg). Now that is crazy pricing. But it is pretty reasonable for the NdPr price to move from the current $100/kg to say $300-400/kg. This only represents a $600-800 extra cost. And avoids the $15,000 tariff.
at these prices. ARU is a multi billion dollar market cap.
there are also other tail winds to the NdPR pricing:
- certainty by contracting with western aligned countries
- ESG credentials (this is already happening in Euro)
- general increase in demand for magnets across multiple sectors (16% YoY predicted).
- the time it takes to get another substantial NdPr mining operation going….minimum 10 years if they go hard and break all records by substantial margins
- increase in military spending also helps NdPR demand.
with any commodity you need to take a view on future pricing. I can’t predict the exact price. But I can look at all the factors….and they all seem to mean NdPr ex China will be in high demand.
some things that could lower demand for NdPr
- growth declining. In 10-15 years the world population shrinks. China will shrink by a third. And lots of other countries. This will totally reshape our economies. The current Ponzi scheme of guaranteed growth will not be possible. But markets don’t think about this yet. Lots on growth from energy transition to off set this etc.
- countries discover they can’t afford the energy transition. And this slows EVs wind power etc. I don’t think the electorates will allow this. But it is a possibility
- technology shifts could also massive reduce EV demand. If self driving cars actually worked. People might opt to just use on demand cars. And reduce the overall numbers of EVs. I think this is 20 years away. And also lots of social issues to overcome. Ie I would not want to share my car.
anyway. Just some thoughts.
(20min delay)