BMI believes that the market for the rare earth metal NdPr oxide (neodymium/praseodymium) has started the year with noticeable tailwind. The research firm – a subsidiary of Fitch Solutions – has adjusted its forecast for the average annual price in 2026 upwards: On average, BMI now expects $90,000 per tonne. The decisive factors are a “robust start to the year”, tightening fundamentals and a political dynamic that is additionally sensitizing the market.
According to BMI, NdPr oxide reached multi-year highs in January. The price reacted not only to supply and demand expectations, but also to signals from China and new regulatory frameworks in several countries. At the same time, the outlook remains differentiated: In the short term, BMI expects more of a sideways movement – but in an environment in which political decisions can trigger new volatility at any time.
NdPr oxide in January near $100,000: Trigger from China
BMI refers to a striking price movement in the middle of the month: On January 15, NdPr oxide rose to a multi-year high of $97,969 per tonne. Announcements from China are cited as the immediate impetus. The companies Northern Rare Earth and Baotou Steel had announced an increase in the transaction price for rare earth concentrate for the first quarter. This supported the market picture and reinforced the upward momentum.
Later in the month, the rally continued, according to BMI: On January 27, $99,935 per tonne was reached. BMI deduces from this that the market is currently reacting not only to physical availability, but strongly to price anchors and expectations originating from the Chinese supply chains. Especially for magnet-relevant rare earths such as NdPr oxide, China acts as a central driver – and accordingly high is the sensitivity to new signals from the country.
Despite the strong movement, BMI emphasizes that the momentum could weaken somewhat in the coming months. The analysts expect NdPr oxide to fluctuate within a range in the short term. From the study’s point of view, the basis for this remains constructive – but not exclusively due to classic supply and demand factors, but also because the sentiment on the market is currently a major driver.
Export rules, quotas and geopolitics: Why the rare earths market remains political
Parallel to the price rally, BMI sees a changed geopolitical and regulatory situation that increases the risk perception in the NdPr oxide market. Among other things, renewed public claims by Donald Trump regarding Greenland, where rare earth resources are considered particularly attractive, and the subsequent announcement of a “framework for a future deal” are mentioned. In addition, there are Chinese export restrictions on rare earths to Japan and a Vietnamese export ban on unprocessed rare earth ore, which came into force on January 1.
BMI also notes that the market is likely to react very sensitively to possible announcements on Chinese quotas. Such quota decisions would normally allow direct conclusions to be drawn about the available quantity. At the same time, BMI refers to the low transparency (“opaque rhetoric”) from Beijing, which increases the scope for interpretation – and thus the probability that expectations and sentiment will dominate in the short term.
In the short-term price projection, BMI expects a relaxation compared to the January peaks: For the first quarter, an average NdPr oxide price of $93,000 per tonne is expected, and $87,000 per tonne for the second quarter. At the same time, BMI expressly does not rule out politically driven volatility and sees the risk profile towards the end of the year more on the upside. In addition, it is pointed out that China’s “second wave” of export controls is currently suspended until November – although it remains open whether a longer-lasting relaxation can be derived from this.
Demand from e-cars and offshore wind: BMI expects deficit also in 2026
For 2026, BMI justifies the upwardly revised NdPr oxide forecast primarily with continued robust demand. NdPr is a key raw material for permanent magnets, which are used in many clean energy technologies – especially in electric vehicles and wind turbines. BMI expects global NdPr oxide demand to increase by 7.7% year-on-year in 2026. The underlying assumptions are derived from forecasts for e-car sales and wind power capacity.
For the e-car market, BMI mentions a target value of 22.9 million passenger electric vehicles (BEV and PHEV) sold worldwide in the current year, which would correspond to a growth of 6.6%. This is relevant because NdPr is used in the traction motors of many e-cars. Although rare earth-free motors are gaining attention, BMI continues to assume that permanent magnet motors will remain the dominant technology in the forecast period due to their efficiency and power density.
A second demand block is offshore wind energy. BMI emphasizes that offshore plants often use direct-drive turbines with permanent magnet generators, which require more NdPr per megawatt than geared designs. For 2026, BMI forecasts a growth in global offshore wind capacity of 14.3% to 109.1 GW. In addition, the firm expects offshore wind to increase more strongly outside the previous focal points in the coming years, with particularly high growth in developed Asian markets.
On the supply side, BMI expects an increase in 2026: NdPr oxide production is expected to increase by 7.4%, mainly driven by China, but also with new capacities in the USA. Global mining output of rare earth oxides is expected to increase by a total of 4.8% to 397,900 tonnes, supported by ramp-ups in Australia, the USA and Brazil. Nevertheless, BMI stands by a clear statement: The NdPr market is expected to show a deficit for the second year in a row in 2026 because supply cannot keep pace with demand growth from net-zero sectors.
In the long term, BMI expects a deficit until 2030. At the same time, the firm sees structural diversification: The market share of the three largest producers – China, Myanmar and the USA – is expected to fall from an estimated 90.7% in 2026 to 74.7% by 2035 because new regions are building up capacities. As a counterforce, however, BMI mentions substitution efforts in the end markets: Manufacturers are looking for alternatives, from magnet-free motors (induction, externally excited synchronous, switched reluctance) to other magnetic materials such as ferrite, AlNiCo or “next-gen” iron nitride.
BMI summarizes the risk profile accordingly in both directions: Stricter Chinese policy or delays in new projects could drive NdPr oxide further upwards. Conversely, a faster-than-expected spread of rare earth-free technologies could dampen demand – even if BMI currently considers this case rather unlikely.
