Rare Earths MMI: China’s Metal Demand Weakens: What It Means for U.S. Rare Earth Buyers
August 5, 2024

The bears continued to make their way into the Rare Earths MMI (Monthly Metals Index), with yet another drop in price action, this time by 6.93%. Many factors pulled at rare earths prices overall, including oversupply, weak demand for metals within China and shifting dynamics in global rare earths supplies. It seems China’s over-production of rare earths continues to contribute to a massive supply glut, leading to cheaper prices and bearish sentiment.

See why technical analysis is a superior forecasting methodology over fundamental analysis and why it matters for your rare earth purchases.

China’s Metal Demand Weakens: What It Means for U.S. Rare Earths Buyers

As the world’s biggest producer and consumer of several metals, any change in China’s domestic metal demand significantly impacts global supply chains. For this reason, there are concerns about the possible effects of recent reports showing a notable decline in China’s demand for metals on U.S. buyers of rare earths.

Fresh data from factories indicates a decline in China’s industrial landscape. The Purchasing Managers’ Index (PMI) clearly demonstrates this trend, showing a decline in manufacturing activity and a resulting decrease in demand for metals. This slowdown partly results from China’s economy moving away from heavy industries and toward a more service-oriented model.

Will Rare Earths Prices Rise in the Remainder of 2024?

Rare earths prices appeared to be bottoming out earlier this year. According to a Reuters study, prices could rise in the second half of 2024, driven by wind power and electric vehicle demand.

Meanwhile, the need for praseodymium (PrNd) and neodymium (NeO), both necessary for producing the powerful magnets used in EV motors, has persisted. According to a recent analysis, there was a slower decrease in PrNd prices in the first half of 2024, which raised optimism for a market reversal.

Counterpoints to Increases in Rare Earth Prices

There are arguments that contradict these encouraging signs. A few market analysts recently issued a warning stating that the price increase may be driven more by sentiment than by fundamentals. Even if demand is rising, supply chain disruptions might not prove as bad as expected, which might restrain price increases. Furthermore, fresh mining projects and recycling programs are progressively going online, which may eventually relieve some supply constraints.

Ultimately, it is essential to temper expectations with the understanding that market sentiment and actual fundamentals may not always align perfectly. As with any commodity, a myriad of factors will influence the ultimate price trajectory, and stakeholders should remain vigilant and adaptable to these dynamic conditions.

https://agmetalminer.com/2024/08/05/china-metal-demand-rare-earths-prices/