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| Rare Earths |
Rare Earths Market Under Pressure as Lynas Warns of Tough Quarters Ahead
Lynas Rare Earths Ltd, the largest producer of rare earths outside China, has reported a weaker-than-expected revenue for the second quarter of FY2025. The company also flagged challenging conditions in the rare earths market, driven by subdued demand from China and declining prices for key products such as neodymium and praseodymium (NdPr).
Declining Prices and Market Oversupply
Lynas’ quarterly revenue stood at A$141.2 million ($87.64 million), falling short of the A$154 million Visible Alpha consensus estimate despite being up nearly 4% year-on-year. The miner attributed the underperformance to weaker NdPr prices, which are essential for manufacturing magnets used in electric vehicles (EVs) and defense applications.
China, which produces 90% of the world's refined rare earths, has been driving oversupply while demand from green energy companies and EV manufacturers remains sluggish. Grady Wulff, a market analyst at Bell Direct, noted, “Until we see material economic recovery in China, less global reliance on China’s rare earth producers, and stabilized growth in demand for EVs, rare earth prices are expected to remain subdued.”
Lynas also faced operational challenges, including difficulties in processing new feedstocks, which contributed to a 4% drop in total rare-earth oxide output compared to the previous quarter.
Outlook for the March Quarter
Lynas expects these challenging conditions to persist into the March 2025 quarter due to continued weak demand in China and the extended Lunar New Year holiday period. Despite the headwinds, the company managed to achieve an average selling price of A$49.2 per kilogram, up from A$34.8 per kilogram last year, aided by favorable exchange rates and a higher-quality product mix.
Shares of Lynas fell 6.6% to A$6.62 following the announcement, marking the company’s worst trading day since March 2023.
