Analysts at energy consultancy Wood Mackenzie are forecasting a rebound in the prices of %RareEarthMetals in this year’s second half.
According to the new outlook from Wood Mackenzie, rare earth prices have likely bottomed and should rise in coming months as demand grows for electric vehicles (EVs) and wind power, and as China curtails its production.
Rare earths are a group of 17 elements that are used to produce items ranging from electric vehicles to consumer electronics such as smartphones and laptop computers.
Prices for rare earth metals surged to their highest level in a decade during 2022 only to plunge over the last 12 months due to increased production in China and slumping demand for electric vehicles.
The price of %PraseodymiumOxide, one of the most widely used rare earth elements, declined 34% in 2023.
Prices for terbium oxide and neodymium oxide are currently at their lowest levels since late 2020.
But now, prices appear to have hit a bottom and should rise as China scales back its production quotas for the remainder of 2024, says Wood Mackenzie.
Last year, China’s production of rare earth metals rose 21.4% year-over-year. That production is expected to slow to a 10% annualized increase this year.
At the same time, demand for electric vehicles are forecast to rise in the coming months, spurred by price cuts and discounts offered from automotive manufacturers such as %Tesla (NASDAQ: TSLA).
China accounts for 70% of rare earth mining and 90% of refined output, according to the U.S. Geological Survey.