SerpApi.Org
Rare earth stocks have been a ticket for riding a roller coaster for over a year, but the latest descent has been particularly brutal. Downward momentum gathered steam last Thursday, 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 MaterialsMP, USA Rare EarthUSAR, Critical MetalsCRML, Energy FuelsUUUU and American ResourcesAREC all fell by more than 10% last week and some stocks continued to fall on Monday.
In a Friday research note, William Blair analyst Neal Dingmann noted that recent underperformance of rare earth stocks, with the group down around 35% to 50% since early June has been driven by "investor market risk-off behavior, hedge funds exiting the space, and various imprecise information."
Dingmann attributed the latest sell-off to the IEA data, which he said industry sources criticized 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.
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, while magnet production capacity would utilized 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, fell 2.9% on Monday after sliding 19.5% last at week.
Companies such as MP Materials and USA Rare Earth have taken a mine-to-magnet approach, giving them built-in downstream demand for mined and refined critical minerals. MP Materials is further insulated by 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.
MP stock was a rare earth winner Monday, though only up 1.1%.
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.
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 Apple and GM.
Rare Earth Supply And Demand
Speaking at a June 23 JPMorgan investor 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.
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 being shaken out, 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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