US rare earth price floors aim to challenge China's market grip

Washington's decision to guarantee minimum prices for magnetic rare earths represents an early bid to challenge China's pricing power, industry experts told Platts, part of S&P Global Energy.

The US government has set price floors of $110/kg for neodymium-praseodymium, $2,050/kg for terbium, and $575/kg for dysprosium through support arrangements with MP Materials and USA Rare Earth — levels that stand approximately two to five times above current Chinese spot prices, according to China's Rare Earth Industry Association. The policies establish alternative benchmarks for materials critical to advanced manufacturing and weapons systems.

The move reflects a growing recognition in Washington that Beijing's control over rare earth supply chains extends beyond mining and processing to include pricing power that can be deployed as a strategic tool. For rare earths, China controls roughly 60% of global mining, 91% of refining capacity, and nearly all permanent magnet production, according to International Energy Agency data.

"The US-backed price floors are the first step towards creating a parallel benchmark system that is based on strategic-security pricing," said Greeshma Gadikota, professor of climate change at Columbia University's Lenfest Earth Institute. The floors help "incentivize domestic production and processing capabilities in the near term and allow the US to gain pricing power in the long term."

Washington and its allies have committed substantial resources over the past two years to building alternative rare-earth supply chains, spanning from mining to recycling. The price floor mechanisms are essentially designed to protect these investments and nascent non-Chinese markets from potential price manipulation.

"Price floors could encourage the development of ex-China benchmarks as projects come online," Gabriel Collins, an independent consultant and a researcher at Colorado School of Mines, told Platts, adding that "cracking China's monopoly over mineral pricing won't be easy given the country's extensive vertical integration, but it can create a foundational step in the right direction."

Platts, part of S&P Global Energy, identified eight US-based rare earth projects that received government support and at least six international projects, though not all received guaranteed price-floor backing.

Market response

Early market activity suggests buyers are increasingly willing to structure contracts around non-Chinese price references, despite significant premiums over Chinese spot prices.

Platts, which launched market-first 'alternative-supply-chain' rare-earth-element assessments, released May assessments on May 29, assessing NdPr oxide CIF North America at $120/kg, unchanged on the month and only slightly above the US-set price floor.

But for heavy rare earths, including terbium and dysprosium, assessments show significant premiums reflecting limited market supply. Platts assessed CIF North America prices for terbium oxide at $4,700/kg for May, unchanged from April, and dysprosium oxide at $2,100/kg, up $100/kg on a month.

By comparison, China's Rare Earth Industry Association reported Chinese prices for April, the most recent price available, for NdPr oxide at $113.04/kg, terbium oxide at $896.66/kg, and dysprosium oxide at $201.89/kg.

"When we talk to buyers of rare earth oxides and tell them the price will be set on the back of a price floor based on an index outside China, they are not surprised. They are actually becoming more supportive of this," Ahmad Ghahreman, chief executive of rare-earths recycler Cycling Materials, told Platts in an interview.

"Because companies understand (if) they want supply chain security, they will have to basically walk around the pricing structure being established outside of China," Grahreman added.

The willingness to pay a premium reflects broader anxieties about supply chain vulnerability. Western manufacturers have watched Beijing deploy export restrictions and licensing requirements throughout 2025 as geopolitical tensions have escalated, creating uncertainty that outweighs short-term cost considerations.

"I think there's an opportunity there for them to step in and enter into long-term agreements with price floors and likely price ceilings," Ross Bhappu, CEO of Energy Fuels, a uranium and rare earth miner, said in an interview with Platts on May 19.

"There was a time -- last rare earths boom -- when buyers might not have been willing to pay a premium. They appear to be more willing now, " Bhappu said.

Sustainability questions

However, the sustainability of such premium pricing remains uncertain as alternative supply chains mature and transparency increases.

"Immature markets provide incomplete signals that market participants are willing to pay premiums to ensure security of supply," said Nick Trickett, head of short-term analytics at CERA. "As more offtakers close these agreements, some of the premium baked into bilateral arrangements will necessarily erode from greater transparency."

Peter Cook, an industry analyst at Peterson Institute, suggested that current high prices in bilateral agreements signal "a premium for shifting to doing business ex-China. But that should change as more producers enter the market globally and gain expertise and scale."

The challenge facing alternative pricing systems stems from China's continued market influence through policy interventions and supply management that distort price signals. Beijing introduced stringent export controls on certain heavy rare earths last year before shifting to a dual-use license regime for shipments of rare-earth containing products, keeping the market tight, particularly for magnetic rare earths used in drones and advanced robotics.

"China's market is heavily influenced by a broader policy environment, willingness to run at marginal losses for periods of time, and pressures that can intervene to increase or decrease supply as deemed necessary," Trickett said.

In a May 18 statement, the White House said it had reached an understanding with China to ease export restrictions, but experts are skeptical that it will lead to structural changes in the rare-earth markets.

"Activities such as export quotas, tariffs, and stockpiling all distort prices and impede price discovery. We are highly unlikely to see a market where these strategic assets are not in some way affected by government-led policies, so these distortions are likely to stay in place," said Chris Berry, founder and president at Mountain House.

Path forward

The development of alternative benchmarks remains in early stages, with considerable uncertainty about how the market will evolve.

Trickett observed that "the world ex-China is moving towards wanting a separate pricing regime, but it's too soon to tell whether the US is going to lead that regime's formation or if we get an incredibly heterogeneous and, in some cases, regionalized market."

The proliferation of regional pricing systems could create challenges of its own, potentially fragmenting markets and reducing liquidity. However, some degree of regionalization may be inevitable given the strategic nature of rare earth materials and the desire of multiple governments to maintain oversight of domestic supply chains.

Despite near-term uncertainties, experts remain optimistic that rare earth markets are on a path towards eventual normalization as alternative supply chains mature and gain scale.

"The ex-China rare earth markets we see emerging today will eventually lead to true price discovery where we see rare earths behaving more like actual commodities than strategic materials contorted by Chinese policies," Cook said.