According to the commodity market analysis system of SunSirs, the domestic heavy rare earth market saw generally stable price trends during the first ten days of September. Prices for dysprosium oxide and dysprosium metal remained steady, while the price of dysprosium-iron alloy edged down slightly. As of the 11th, the price of dysprosium oxide stood at 1.465 million RMB/ton; the price of dysprosium-iron alloy was 1.42 million RMB/ton (a decline of 0.35%); and the price of dysprosium metal was 1.965 million RMB/ton.

Market prices for heavy rare earths remained stable during the first ten days of the month; this stability was not driven by a single factor but was the result of the interplay between rigid supply, demand support, policy regulation, and market dynamics.

Supply side: Rigid constraints continued to intensify

Domestic rare earth supply is strictly constrained by total production quotas. The total rare earth mining quota for 2026 is set at 285,000 tonnes (REO equivalent), comprising 246,000 tonnes of light rare earths (up 7.1% year-on-year) and 39,000 tonnes of heavy rare earths (up only 2.6%, representing near-zero growth). With quotas for medium and heavy rare earths remaining stagnant for years, a clear supply ceiling is in place. Even with reports of planned production expansion at the Bayan Obo mine, output remains strictly capped by quotas and will not exceed the total limit simply due to increased ore extraction. Meanwhile, growth in overseas supply is limited; imports from Myanmar face disruptions, and alternative overseas capacity can only meet low-to-mid-end demand for light rare earths, leaving the heavy rare earth sector still heavily reliant on China. Additionally, some domestic enterprises have reduced output due to invoicing issues in the scrap recycling sector, further limiting the overall growth of supply for the year.

Demand side: Structural support provided a solid foundation

The primary downstream applications for heavy rare earths are permanent magnet materials used in new energy vehicles and the wind power sector. As the second and third quarters are traditionally off-seasons for these industries, magnet manufacturers have faced insufficient orders, causing operating rates to drop to 60%-65%. Faced with price pressure from end-market enterprises, magnet manufacturers have generally adopted conservative strategies—such as "zero-inventory" and "procurement-on-demand" policies—and have resisted high prices, leading to a significant contraction in essential demand for heavy rare earths. Furthermore, to cut costs, the production of some low-to-mid-end magnetic materials has involved reducing the addition of heavy rare earth elements like dysprosium and terbium; this has further suppressed demand, keeping the heavy rare earth market at low levels.

Policy Front: Strategic Control and Price-Supportive Stockpiling

Since 2026, a series of policies regulating rare earths have been rapidly implemented. The *Regulations on the Implementation of the Mineral Resources Law* have officially come into effect, marking the first time rare earths have been included in the national strategic mineral resources catalog via administrative regulation and establishing a statutory, normalized state stockpiling system. The National Food and Strategic Reserves Administration has launched the fourth phase of its rare earth stockpiling plan; the annual stockpiling targets for neodymium metal from 2026 to 2028 are set at 3,000 tons, 4,000 tons, and 5,000 tons, respectively. This stockpiling mechanism provides a price floor, facilitating the gradual transition of rare earths from "cyclical commodities" to "strategic assets." Meanwhile, industry consolidation continues to advance. Three major central state-owned enterprises—China Rare Earth Group, China Nonferrous Metal Mining Group, and China Minmetals—have simultaneously initiated asset restructuring and integration; the formation of these major northern and southern rare earth groups is concentrating fragmented mining rights and smelting quotas into the hands of leading enterprises, thereby making the pace of upstream supply more controllable.

Market Outlook

The market for heavy rare earths has recently remained stable, primarily due to the combined impact of insufficient short-term demand and cooling market sentiment. From 2026 onwards, the global supply-demand gap for rare earths is expected to widen further, potentially driving prices to rise steadily.

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