Prices of neodymium and praseodymium, critical for EV magnets and defense equipment, have surged to $123 per kg, more than double the July 2024 levels. The rally above the $110 per kg price floor set by the U.S. government means MP Materials will not need subsidies for its output. This price strength marks the highest level since July 2022.

China dominates rare earths with 90% of refining capacity and 70% of mined output, but Western governments are pushing to reduce dependence. The Pentagon's ground-breaking deal with MP Materials included price support to help the company compete with Chinese producers. MP Materials previously supplied 7-9% of China's NdPr oxide production, but the U.S. government now requires the company to halt those shipments.

The price rally, driven by strong magnet demand and deliberate supply management in China, has temporarily boosted Western rare earth companies. However, analysts caution this market tightness is short-term and doesn't reflect underlying fundamentals. Benchmark Mineral Intelligence expects a downward correction by March's end, suggesting the current elevated prices may not be sustainable.