SerpApi.Org
Rare earth stock prices exploded last year after China, in retaliation for Trump tariffs, flexed its near-monopoly on production of industrial-strength magnets by briefly slamming the brakes on exports. Panic ensued, particularly among automakers as Ford had to halt production of the Explorer and other vehicles in June 2025.
That was the starting gun for the Trump administration's race to secure a non-Chinese rare-earth supply chain, suddenly seen as fundamental to both economic and national security.
Just weeks later, the Trump administration launched what has grown into a multibillion-dollar financing effort. The U.S. government became the largest shareholder in MP MaterialsMP and pledged to buy the rare earth oxide from its Mountain Pass, Calif., mine at more than twice the going market price.
In the year since that initial $400 million investment, the fledgling U.S. rare earth industry has grown up fast — consolidating into three major, vertically-integrated players with operations spanning mine to magnet production, along with a bunch of more narrowly focused competitors.
Yet the initial frenzy over rare earth stocks, which saw MP more than triple from the Pentagon's buy-in price, has given way to at least a temporary hangover. One of those big players, USA Rare EarthUSAR, nearly doubled after the Commerce Department's investment was announced in January, but USAR stock now sits below the government's entry point.
IEA Rare Earth Outlook
Investor interest has ebbed and flowed, often along with U.S.-China trade tensions. But the latest descent on the rare-earth roller-coaster ride has been particularly brutal. Downward momentum gathered steam last week, after the International Energy Agency's Global Critical Minerals Outlook 2026 edition highlighted a planned surge in mining capacity well beyond expectations of refining and magnet production.
MP, USA Rare Earth, Critical MetalsCRML, Energy FuelsUUUU and American ResourcesAREC all fell by more than 10% last week. That left most of the group down 35% to 50% since early June, William Blair analyst Neal Dingmann wrote in a July 17 note. Rare earth stocks finally began to recover over the past few days.
Dingmann attributed the recent underperformance of rare earth stocks to "investor market risk-off behavior, hedge funds exiting the space, and various imprecise information."
He noted that the IEA data has come under criticism by his industry sources as either inaccurate or misleading. However, the William Blair analyst sees the IEA findings as bullish for downstream producers that turn mined rare earth oxide into metals and magnets, since it implies they won't starve for feedstock.
IEA Rare Earth Outlook
The IEA said that mining capacity outside China for rare earth elements, if all announced projections come to fruition, would nearly triple by 2035. However, Dingmann notes that IEA's projection of refined capacity in 2035 would only be sufficient to process two-thirds of mine output. Magnet production capacity would utilize just under half of refined output.
To the extent that IEA data is credible, the projections would appear negative for independent rare earth miners. Critical Metals, which has a rare earth deposit in Greenland, slid 19.5% in the week through July 17, though it has since rallied around 4%.
Yet Dingmann wrote that some rare earth executives saw the IEA report as inaccurate because announced magnet projects could theoretically outstrip refining output. Other executives noted that the IEA's outlook for mined capacity is likely to prove too optimistic as some planned projects fall by the wayside.
Rare Earth Supply And Demand
Ryan Corbett, MP's chief financial officer, told a June 23 JPMorgan investor conference that the market appears in balance with roughly 30,000 tons of magnet capacity and 15,000 tons of NdPr oxide (neodymium-praseodymium). The rule of thumb, he says, is to divide magnet output by two to get the amount of NdPr needed.
Yet another 30,000 tons of magnet capacity already has been announced outside of China, Corbett said. "The view is that that number will go to 160,000 tons."
Bottom line: MP says "the binding constraint here is going to be provable, demonstrable scaled access to feedstock."
Speaking at that same June 23 JPMorgan conference, USA Rare Earth CFO William Steele sketched out a looming supply-demand imbalance that should favor rare earth magnet makers long-term. Including Energy Fuels, USA Rare Earth, MP Materials, Noveon Magnetics and Vulcan Elements, Steele estimated "somewhere between 30,000 to 50,000 metric tons of magnets serving a 100,000 metric ton market over time," according to a FactSet transcript.
A Potential Catalyst Ahead
The William Blair analyst also sees a potential catalyst for the stocks ahead as rare earth suppliers announce more offtake agreements for their supply, such as MP Materials has with AppleAAPL and General MotorsGM.
USAR's Steele said the current market for rare earth magnets is 30% to 40% industrial motors and a similar share for mobility, spurred by electric vehicles. About 10% comes from aerospace and defense, with heavy rare earth magnets that can withstand extreme heat needed for Lockheed Martin's F-35. Windmills account for 7% to 9% of demand and healthcare technology 10% to 15.%.
However, some parts of the market are huge growth areas. Beyond EVs, he highlighted humanoid robots and, more broadly, industrial automation, which is "supposed to grow 45-fold." Millions of drones will mean millions of magnets needed. Further, data centers go through 20,000 to 40,000 drives a month, each needing a magnet, on top of cooling needs.
MP, USAR, UUUU
MP, USA Rare Earth and Energy Fuels all are taking a mine-to-magnet approach. This gives them built-in downstream demand for mined and refined critical minerals. In addition, there is the price floor of $110 per kilogram of NdPr (neodymium-praseodymium) that the Pentagon agreed to pay when it made a $400 million investment in MP in July 2025.
The Department of Commerce's $277 million investment in USAR, with shares priced at 17.20, came with $1.3 billion in secured financing but not a price floor. However, USA Rare Earth acquired Serra Verde for $2.8 billion in April. That was after the owner of the Brazilian rare earth mine received financing and a 15-year offtake agreement with a price floor from a U.S.-government funded special purpose investment vehicle.
The IBD Methodology
Energy Fuels has transformed into a major rare earth player over the past year with two acquisitions. In January, the Denver-based company that had been better known as a uranium processor, bought Australian Strategic Materials, a producer of rare earth metals and magnets, for $299 million. Last month, Energy Fuels announced a $1.9 billion deal to buy Germany's VAC (Vacuumschmelze), which produces magnets in South Carolina, as well as in Europe and Asia.
The rare-earth "supply gap is concentrated in the most technically challenging and underinvested parts of the value chain, which is exactly where VAC adds critical downstream capability," Energy Fuels CEO Ross Bhappu said in announcing the deal on June 23.
MarketSurge shows that rare earth stocks tend to have an elevated 21-day average true range, meaning they're quite volatile on a day-to-day basis. That puts investors following recommended sell rules at high risk of shakeouts, even if the trend is higher.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
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