West Needs Its Own Rare Earth Pricing to Escape China’s Grip

The West needs its own rare earth pricing to reduce exposure to Chinese benchmarks. A recent rally in neodymium-praseodymium prices pushed markets above the US government’s support floor. This shift reduces subsidy risk under Washington’s deal with MP Materials.

The US Department of Defense structured a floor-price mechanism in July last year. The agreement guarantees a minimum of $110 per kilogram for NdPr output. If prices stay above that threshold, taxpayers avoid subsidy costs. Moreover, the United States Department of Defense captures 30% of upside gains.

However, China still sets the reference price for that deal. Therefore, Western pricing independence remains incomplete.

West Needs Its Own Rare Earth Pricing Mechanism

The current benchmark relies on the China ex-works NdPr index compiled by Asian Metal. Another widely followed reference comes from Shanghai Metal Market. Both agencies operate under China’s 1998 Pricing Law framework.

Chinese pricing power reflects its dominance in rare earth supply chains. China controls mining, processing, and magnet manufacturing capacity. As a result, its domestic market drives global price discovery.

Yet Chinese pricing reflects domestic policy priorities. Beijing restricts exports while Western economies build alternative supply chains. Consequently, Chinese ex-works prices may not mirror Western market dynamics.

A November 2025 report from the US Select Committee on China highlighted legal constraints on mineral price reporting. The report noted limits on publishing prices that diverge from government preferences. This structure complicates transparent global benchmarks.

Western Exchanges Explore Rare Earth Pricing Alternatives

The US government included an escape clause in its agreement with MP Materials. The DoD can switch to an internationally recognized ex-China NdPr index if one emerges. This clause signals Washington’s intent to foster independent price discovery.

Western agencies and exchanges now respond to that challenge. Benchmark Mineral Intelligence collects rare earth prices outside China. Meanwhile, both CME Group and Intercontinental Exchange study rare earth futures contracts.

Lithium Markets Offer a Pricing Template

Lithium markets provide a useful comparison. Chinese exchanges once dominated lithium price discovery. However, the CME Group launched lithium hydroxide futures in 2021.

Trading volumes expanded significantly in 2025. January recorded a monthly turnover record of 19,590 contracts. The CME added lithium carbonate, spodumene, and options contracts. This suite created a comprehensive hedging ecosystem.

Chinese prices still influence lithium markets. Nevertheless, Western producers now hedge risk independently. That evolution attracts financing and stabilizes project development.

SuperMetalPrice Commentary:

The West needs its own rare earth pricing to match supply chain ambitions. Production without pricing power leaves strategic gaps. Transparent benchmarks and liquid futures markets will unlock capital for rare earth projects. Until Western price discovery matures, China will retain leverage over NdPr valuation and downstream magnet markets.