Rare earth market supply and demand imbalance? Geopolitical risks boost concept stock valuations

Since mid-October, rare earth-related stocks have performed remarkably well. In the US stock market, American Resources (AREC) surged 36.75% in a single day, Critical Metals (CRML) increased by 28.74%, and Energy Fuels (UUUU) also rose over 10%. More notably, this rally is not a fleeting phenomenon—since early October, CRML has gained a total of 382%, AREC has risen 126%, and UUUU has increased by 71%.

China’s Rare Earth Control Upgrades Trigger Global Supply Chain Reassessment

The key driver behind this rally is policy. On October 9, China announced an upgrade to its rare earth export controls, extending the restrictions from April on seven types of rare earth metals and adding five more to the control list. This move highlights the strategic importance of rare earths—China accounts for nearly 70% of global rare earth production, and the US remains heavily dependent on imports from China.

Justin Lin, an investment analyst at Global X Management based in Sydney, pointed out, “This clearly indicates that China can leverage its rare earth dominance to exert influence and may continue to use this tool in the future.” The escalation of geopolitical tensions has further heightened investors’ awareness of supply chain risks.

US Government Intervention to Strengthen Economic Security Strategies

In response to China’s supply restrictions, the US government has taken proactive measures. Over the past few months, the government has gradually increased its stake in rare earth miners MP Materials and mining company Trilogy Metals, and is evaluating investments in Critical Metals. Concurrently, JPMorgan Chase has committed—announcing a $1.5 trillion investment over the next decade to support industries that enhance US economic security and resilience, particularly in critical mineral sectors like rare earths. The combined policy support and capital infusion have further fueled the upward momentum of rare earth concept stocks.

Long-term Demand Support and Supply Shortages Becoming Normal

Looking ahead, Macquarie Bank believes that the booming robotics and electric vehicle industries will continue to expand rare earth demand. With China’s supply tightening, the rare earth market is expected to remain in a long-term supply-demand imbalance. Jefferies remains optimistic, maintaining a buy rating on leading rare earth company MP Materials (MP), reflecting industry confidence in the future performance of rare earth concept stocks.

The upward cycle of rare earth concept stocks not only reflects short-term policy effects but also signifies a deeper global focus on supply chain security and resource independence.