Rare Earths Market Trends: Q3 2026 Review and Forecast

Heavy rare earths prices hit record premiums outside China

The defining story of the quarter was the widening split in heavy rare earths pricing.

Benchmark Mineral Intelligence’s dysprosium oxide CIF Europe price was up 150 percent by the end of Q3, and sat at roughly 16.3 times the equivalent DDP China price, up from 6.8 times at the end of Q2.

In September alone, dysprosium oxide CIF Europe rose 56 percent to average US$3,500 per kilogram, while terbium oxide climbed 23 percent to US$6,745 per kilogram, according to Benchmark.

Chinese domestic dysprosium and terbium prices retreated from their mid-quarter highs over the same period.

Against that backdrop, George Ingall, senior price analyst at Benchmark, said ex-China heavy rare earths supply chains “remain acutely under-supplied relative to demand.”

Fastmarkets data tells a similar story. On August 27, the firm's dysprosium oxide price ex-warehouse Rotterdam stood at US$1,250 to US$1,675, compared with US$270 to US$330 FOB China. Terbium oxide in Rotterdam was assessed at US$4,200 to US$5,000, against US$1,180 to US$1,270 in China.

The rally carried into the fourth quarter of the year.

In the week ended October 1, Fastmarkets’ terbium oxide CIP global assessment jumped 41 percent to US$5,000 to US$8,000, while dysprosium oxide rose to US$2,500 to US$3,500. Market participants told Fastmarkets that US buyers were paying up ahead of Pentagon sourcing rules that take effect on January 1, 2027.

The rules bar the US Department of Defense from buying neodymium-iron-boron and samarium-cobalt magnets containing material mined, refined, separated, melted or produced in China.

Japan, the largest consumer of dysprosium and terbium outside China, has been hit especially hard. Chinese customs data cited by Fastmarkets shows no dysprosium oxide or terbium oxide was exported to Japan in 2026.

New supply will be slow to arrive.

Don Swartz, CEO of Rare Earths Americas (NYSEAMERICAN:REA), told Fastmarkets in late August: “In essence, there are 0 heavies being produced and separated in the Western world.”

He estimated that more than 90 percent of heavy rare earths now come from Myanmar.

Defense is a growing source of demand. During the SC Insights webinar, Hofer described how rare earths and battery metals intensity climbs with the size of the platform.

“You can see, for example, an FPV drone, which is one of the smallest in scale, only weighing 2 kilograms, going through e-bikes that can go up to 100 kilos,” he said. “Then it starts to get more massive, and the amount of elements, both battery critical and even rare earths, starts to increase at a very large pace.”

Leyland said the hardest step for the west is taking terbium and dysprosium through to magnet production.

“The barriers even aren't just in building the facility; they're in actually having access to the equipment, which again is something where China really understands what its position is,” he explained.

NdPr prices: Ex-China material slips below the floor

Light rare earths told a different story.

Benchmark’s praseodymium-neodymium (PrNd) oxide DDP China price eased just 1 percent over Q3, but its CIF North America and Europe prices fell more sharply, slipping below the US$110 per kilogram floor built into MP Materials' (NYSE:MP) and Lynas Rare Earths’ (ASX:LYC,OTCQX:LYSDY) agreements with the US Department of Defense.

Ex-China PrNd prices fell more than 13 percent in August as producers wary of selling into China redirected volume toward an already oversupplied western market, Benchmark said.

Prices partly recovered in September: ex-China PrNd oxide rose 12 percent to reach US$106,500 per metric ton CIF, while the Chinese price edged up 1 percent to US$108,696. That leaves Chinese domestic material at a slight premium to ex-China supply, a reversal of the usual relationship.

That matters given how the floor was meant to work. Speaking with the Investing News Network (INN) on September 4, John Kaiser of Kaiser Research Online recalled how China responded to the 2009 to 2012 rare earths boom by ramping up supply and pushing prices so low that outside producers could not compete.

“We've seen the US say, ‘Okay, we'll pay MP Materials double what the China price is,’ just so that this thing is in the money,” he said. For context, the US Geological Survey puts the 2025 average NdPr oxide price at US$69 per kilogram FOB, which is well under the US$110 floor.

Watch the full interview to hear Kaiser's thoughts on the trajectory of the current market.

Kaiser said the shift in western policy has drawn him back to the sector, particularly projects with heavy rare earths.

“I'm starting to take a fresh look again at these companies, these rare earths projects, especially ones with heavy rare earths, because these are ones where even China has a depletion cliff looming,” he said.

Hofer made a similar point, saying many Chinese mining assets are aging and that China is struggling not only with its quotas, but also with “the maturity of their assets.”

Rare earths news: US and EU governments step up support

Government money continued to flow into the rare earths sector.

On August 24, the US Department of Defense announced a US$750 million offtake for mixed rare earths carbonate from Brazil’s Serra Verde Group, part of a broader US$1.55 billion package. In early September, USA Rare Earth (NASDAQ:USAR) said that it had completed its combination with Serra Verde.

Later in the month, Lynas announced a AU$968 million deal to acquire Meteoric Resources (ASX:MEI,OTCPL:METOF) and its Caldeira project in Brazil, which it said could eventually produce 127 metric tons per year of dysprosium and terbium. The transaction is expected to close by March 2027.

Washington also moved to keep secondary feedstock at home. On July 30, it imposed temporary restrictions on exports of black mass and end-of-life rare earth magnets, and an August presidential determination moved to treat recoverable rare earths and end-of-life magnets as strategic defense resources.

In Europe, the EU added four rare earths projects to its strategic projects list on October 9: Solvay’s (EBR:SOLB,OTCPL:SVYSF) BREES recycling project in France, HyProMag’s recycling plant in Germany, Neo Performance Materials' (TSX:NEO,OTCQX:NOPMF) Silmet 2.0 processing project in Estonia and the Sokli mining project in Finland.

Upcoming US and China policy deadlines could heighten uncertainty

Two dates now loom over the rare earths market.

The first is November 10, when China’s one year suspension of its October 2025 export controls is due to expire. If reinstated, those measures could extend licensing to foreign-made products containing Chinese-origin rare earths, as well as to separation and magnet-making equipment and technology.

Whether that deadline still stands is unclear.

US Secretary of the Treasury Scott Bessent said on September 23 that the US-China trade truce, which was set to expire in November, would be extended to January 10, 2027. A Chinese Ministry of Commerce official later said the two sides had agreed to extend the arrangement to the same date, but the statement did not specifically mention rare earths, and Beijing has not published a formal notice changing the November 10 end date of its suspension.

John Feneck of Feneck Consulting is not optimistic about relations between the two countries.

“I don't think the Chinese government is friendly with us at all,” he said on September 25, adding that the market's reaction to last year’s deal still lingers. “Rare earth stocks got crushed on that agreement last fall. Yeah, some of them have never come back.”

Listen to the full interview above to hear more about Feneck's stock picks.

Among the companies he is watching in the sector is Eastport Critical Metals (TSXV:EVI,OTCQB:EVIIF), which is drilling its Semarule rare earths project in Botswana.

The second date is January 1, 2027, when the Pentagon’s sourcing restrictions take effect. Benchmark expects demonstration and pilot-scale buying from aspiring magnet makers in North America and Europe to keep upward pressure on heavy rare earth oxide prices.

For investors, the message from Substack newsletter writer Craig Tindale is that positioning should follow policy.

Watch the full interview for more of Tindale's portfolio advice.

“Our portfolios have to mimic what is happening on the ground. Things are moving onshore, so our portfolios should mimic that,” he told INN. In his view, the world is splitting into a China-Russia bloc, a US bloc and possibly a European bloc, and “investing looks to be like we stay inside our block.”

SC Insights' Leyland sees the bottleneck easing as new processing capacity comes online. “Once you get three or four years in the future, we're not necessarily going to have rare earths as potential bottlenecks anymore,” he said.

Until then, buyers outside China will keep paying a steep premium for security of supply.