Rare-earth market fundamentals continue to tighten, but higher spot prices and policy support have yet to translate into gains for related equities. Prices for neodymium-praseodymium, or NdPr, outside China have risen 23% this year, while the rare-earth developers covered by Canaccord have fallen an average of 17% and producers have declined 28%.
Reg Spencer, head of Canaccord's critical minerals team, said in a recent report that share-price performance has been driven more by the global macroeconomic environment than by actual rare-earth supply and demand. Strategic-mineral prices remain firm, but the stocks are being traded as higher-risk assets.
NdPr rises while the REMX ETF retreats
NdPr prices in China and Rotterdam have gradually converged and moved higher this year, with prices in Western markets now above $110 per kilogram. The REMX rare-earth ETF has moved in the opposite direction. After peaking in May, it fell from above $100 to the upper-$50 range.
Among producers, Lynas, MP Materials, USA Rare Earth and Iluka have all declined sharply. China Northern Rare Earth and Shenghe Resources are also lower for the year. Developers have performed somewhat better, largely because Viridis has gained more than 50%. Excluding Viridis, Hastings is down by about two-thirds, St George by roughly half, and Arafura and Brazilian Rare Earths by approximately 35% to 50%.
Canaccord said the industry's recent mergers and acquisitions, direct government support, limited Western supply and the 23% rise in non-Chinese NdPr prices all point to resilient market fundamentals. Those factors, however, have not yet been reflected in equity valuations.
The $110-per-kilogram floor changes project economics
One of the most important developments over the past year has been a shift in the United States from simply financing Western supply chains to using price support to improve project economics. Canaccord said MP Materials, Lynas and USA Rare Earth have all received NdPr price support at $110 per kilogram. USA Rare Earth has also received price support of $575 per kilogram for dysprosium and $2,050 per kilogram for terbium.
The price floor has influenced NdPr prices in China as well. Export quotas, policy changes and export controls caused Chinese NdPr prices to fluctuate sharply in recent years, moving between about $175 per kilogram and roughly $50. Canaccord said prices in China have begun to stabilize around $110 per kilogram over the past 10 months.
Narrower price swings should, in theory, improve financing conditions and make rare-earth projects easier to model. Yet the stocks remain valued below their levels at the start of the year, even as project cash-flow assumptions have become more stable. That gap suggests investors are still prioritizing interest rates, capital spending and shifts in risk appetite.
Heavy rare earths trade at separate Chinese and Western prices
The NdPr market is moving closer to a single global price, but heavy rare earths such as dysprosium and terbium remain divided. China's restrictions on heavy-rare-earth supply have created a smaller Western market with its own prices and limited transparency.
Dysprosium is currently priced at about $1,074 per kilogram in Rotterdam, compared with roughly $227 in China. Terbium prices are about $4,594 and $983, respectively. The gaps are even wider for yttrium, gadolinium and samarium.
Over the past five years, Chinese yttrium oxide has averaged about $8 per kilogram, while European spot prices have been around $740. Some US quotations have reached as high as $1,750 per kilogram. Gadolinium prices in Baltimore are about 10 times those in China, with US delivered quotations reaching up to $3,100 per kilogram.
Samarium, used in the samarium-cobalt magnets required for missiles, fighter aircraft and radar systems, has a delivered price in North America roughly 346 times higher than in China. Japan has also warned that yttrium inventories are falling rapidly and could face a severe shortage before the end of the year. Available data put Chinese yttrium oxide at about $9 per kilogram, compared with approximately $1,150 outside China, widening the gap to roughly 179 times in two years.
Canaccord cautioned that Western price premiums should be interpreted carefully. In 2025, the dysprosium and terbium market outside China was only about 151 tonnes, while the Chinese market was roughly 22 times larger. Limited volumes and opaque trading make it uncertain whether current prices can be sustained. Some magnet manufacturers have already begun shifting toward lower-cost ferrite magnets. Canaccord expects non-Chinese yttrium prices to fall from $740 per kilogram this year to $100 by 2030.
Forecasts for magnet demand continue to rise
Demand estimates have nevertheless continued to improve. Canaccord expects demand for neodymium-iron-boron magnets to grow at a compound annual rate of 7.3% through 2035, reaching about 365,000 tonnes. That is 15% above its previous forecast. Electric vehicles remain the largest source of demand, with global sales expected to rise from 23.5 million units in 2026 to 52 million in 2035.
The revised demand model also includes cooling motors for data centers, electric bicycles, scooters and drones. Drones currently account for only about 1% of forecast demand, but combined military drone production in Ukraine and Russia has previously been estimated at about 9 million units, suggesting that actual demand could exceed the model's current assumptions.
Humanoid robots could provide another source of demand for rare-earth magnets. Canaccord expects humanoid-robot shipments to grow at a 45% compound annual rate to 2.5 million units by 2035. Tesla is said to be preparing an Optimus production line capable of making 1 million robots a year, although the pace at which that plan is implemented remains an important variable for demand forecasts.
Canaccord forecasts a global NdPr shortfall of about 7% this year, with the deficit continuing through 2028. As the Eneabba, Kangankunde, Caldeira and White Mesa projects, along with Lynas expansion projects, begin production, the market could be broadly balanced between 2029 and 2031. By 2035, however, the deficit could widen again to 10%. Dysprosium and terbium are expected to follow a similar path, with a shortfall of about 12% by 2035.
Western magnet capacity still lacks processing links
Non-Chinese neodymium-iron-boron magnet capacity is expected to increase by more than 300% by 2030, reaching about 70,000 tonnes. That would still represent only 23% of global capacity, compared with approximately 77% in China. The larger constraint is a missing link in the Western supply chain: metalization and alloying.
Global capacity for NdFeB metalization and alloying is expected to be about 210,000 tonnes in 2026, with China controlling more than 90%. Capacity outside China is forecast to rise to roughly 38,000 tonnes by 2030. Although that would nearly double the current level, it would remain below the magnet capacity planned in Western markets.
Canaccord identified metalization as the main blind spot in efforts to build a Western supply chain. Its work indicates that delivery times for strip-casting equipment can reach two years, while current export controls make it difficult to source such equipment from China. Even if Western mining and separation capacity expands, growth in magnet manufacturing could therefore remain constrained by the midstream processing stage.
Valuation discounts reflect macroeconomic pressure
The rare-earth producers covered by Canaccord trade at an average price-to-net-asset-value multiple of about 0.57, while developers trade at approximately 0.47. Based on Canaccord's target prices, the potential revaluation is 104% for MP Materials, 108% for Lynas, 204% for USA Rare Earth and 150% for Energy Fuels. Energy Fuels' target price has been reduced to C$30 because of project delays.
Canaccord downgraded Meteoric from "speculative buy" to "hold", mainly because its valuation is now linked to Lynas's all-share acquisition. The proposed consideration is 0.0207 Lynas shares for each Meteoric share. Lynas stock fell nearly 8% on the day the transaction was announced.
Hastings was upgraded from "hold" to "speculative buy" on valuation grounds after its share price fell sharply. Its target price was nevertheless cut from A$0.55 to A$0.30.
Rare-earth projects typically require long construction periods and substantial capital spending, making them highly sensitive to interest rates and financing conditions. With the US 10-year Treasury yield above 5%, volatility rising in technology stocks and investors reducing exposure to higher-risk projects, the market may be placing more weight on delivery schedules and cash flow than on commodity prices alone.
Tungsten stocks show a similar disconnect
Tungsten is not a rare earth, but China controls about 80% of global supply, and the gap between commodity prices and related equities has developed in a similar way. Almonty Industries, a representative Western tungsten producer, recently fell below $9. The shares are down 62% from their April peak and have returned close to their level at the start of the year. They also fell about 10% in a single session after the company's investor day.
When Goldman Sachs analyst Nick Cash initiated coverage of Almonty, he noted that tungsten prices had risen roughly eightfold since the beginning of 2025 and positioned the company at the center of the Western tungsten-supply investment theme. His target price was only $13, however, below the market consensus of $24.73. Even at that more cautious target, the gap between the share price and the implied valuation remains substantial.
Operating data have improved. The Sangdong tungsten mine in South Korea began production in September and is moving toward round-the-clock operations. The first shipment of concentrate is expected later this month. Cantor expects Almonty's output to rise from 126,287 tonne units this year to 444,400 tonne units in 2027, while all-in sustaining costs could fall from $905 per tonne unit to $319.
Oppenheimer estimates that the company will trade at approximately 5.7 times and 4.2 times expected 2027 and 2028 EBITDA, respectively, with net cash of about $290 million.
The recent pressure on the shares has come mainly from lower spot prices. Western ammonium paratungstate, or APT, has fallen from $3,140 per tonne unit to about $2,700, while prices in China have declined more sharply. The market is weighing whether a short-term tungsten correction will reduce project revenue and whether the ramp-up at Sangdong can proceed as planned.
The performance of rare-earth and tungsten stocks shows that tight commodity supply does not automatically produce equivalent gains in mining equities. Project timelines, financing costs, processing capacity and spot-price volatility remain central to how investors value these companies.