Western countries are not only trying to break free from China’s control over rare earth supply, but also seeking ways to break China’s control over rare earth prices in order to protect the rare earth market and critical mineral supply from being manipulated by China’s opaque pricing and supply controls, and to shake off the influence of China’s rare earth policies.
Currently, the price of neodymium-praseodymium (PrNd) oxide produced in China has surged to $125 per kilogram, reaching the highest level since July 2022, exceeding the floor price of $110 per kilogram. Global transactions involving PrNd producers, including deals with major U.S. rare earth materials producer MP Materials and the U.S. Department of Defense, are referencing China’s PrNd prices, causing a 40% increase in China’s PrNd prices and naturally raising prices outside of China.
Under the agreement between MP Materials and the federal government, the current pricing reference for neodymium praseodymium is based on the prices published by the Asian Metal Market in China. However, the agreement stipulates that if an internationally recognized alternative price index reflecting the inter-market price of neodymium praseodymium oxide outside of China can be established, the U.S. may choose a price index outside of China.
In a recent analysis report, “Benchmark Mineral Intelligence,” a professional market information and price assessment organization based in the UK, pointed out that due to limited liquidity, transparency, and alternative supply in the rare earth market, Western consumers remain price takers in the rare earth market, especially manufacturers in the electric vehicle, wind turbine, defense systems, and high-efficiency motor sectors. They are at risk of facing significant cost fluctuations due to sudden policy changes by China.
A bipartisan investigation by the U.S. Congressional-Executive Commission on China last November revealed that China uses its own mineral price reporting legal framework to adjust prices at any time based on its economic and national security interests, categorizing any prices not aligned with China’s wishes as illegal.
The report also highlighted that after decades of meticulous planning, China has coerced countries worldwide to control various critical minerals. In China’s view, critical minerals are a geopolitical necessity, not ordinary market commodities, hence the monopolistic practices.
To reduce reliance on China’s pricing and supply policies, a key step is to break free from China’s pricing control. The United States has been working on establishing a rare earth price floor led by the West. Exchanges and price reporting agencies outside of China are also considering introducing rare earth futures contracts and rare earth price assessments.
On February 4th, U.S. Vice President JD Vance stated that the U.S. would propose a system for setting price floors for global critical mineral resources. The U.S. is proposing the establishment of a critical minerals trade group, with many countries already signing onto the plan. Officials from Europe, Asia, and Africa participated in the meeting, aimed at discussing how to establish technology supply chain partnerships bypassing China.
Jacob Helberg, the Deputy Assistant Secretary for Economic Affairs at the U.S. State Department, told Bloomberg last week that after conducting in-depth research with several agencies, the government has developed a highly complex price floor system and is currently in consultations with allies and partners.
In July 2025, the Pentagon reached an unprecedented agreement with the largest U.S. rare earth mining company, MP Materials. Under the agreement, the U.S. government holds a 15% equity stake in the company. The Pentagon also set price floors and procurement agreements for MP Materials’ rare earth products.
Given the maturing and expanding rare earth market outside of China, “Benchmark Mineral Intelligence” launched four rare earth price assessment grades last summer. Daisy Jennings-Gray, Pricing Director at “Benchmark Mineral Intelligence,” stated that China’s opaque pricing and dependence on China-dominated supply chains have brought significant uncertainty to manufacturers, innovators, and governments.
On October 15, 2025, U.S. Treasury Secretary Besent denounced China’s market manipulation in an interview with CNBC. He stated, “For the past twenty years, China has used its global dominance in rare earth refining and processing to significantly depress prices, leading to bankruptcies of foreign competitors in the rare earth industry”.
Besent emphasized the need for implementing industrial policies when faced with non-market economies like China. He further mentioned, “Therefore, we will set price floors for a range of industries and implement advance purchases to ensure this situation does not recur.”
Earlier this month, sources revealed to Reuters that the Chicago Mercantile Exchange group (CME Group) is set to launch the world’s first rare earth futures contract. Meanwhile, another major Western derivatives exchange, the Intercontinental Exchange (ICE), is also considering launching a similar contract, although progress may be behind the CME Group.