Adamas forecasts NdPr prices to hit $150/kg to ensure supply keeps pace with auto demand

Despite a widely held belief that soaring neodymium-praseodymium prices would press automakers to look at alternatives to these rare earths for magnets going into electric vehicles, Adamas Intelligence forecasts that NdPr oxide prices will double by the end of the decade.

NdPr is a combination of the rare earths neodymium and praseodymium used in the powerful neodymium-iron-boron magnets that go into speakers, electronic devices, power tools, wind turbines, EV motors, and a wide range of other products.

For the better part of the last decade, Adamas has been forecasting that NdPr oxide prices would top US$100 per kilogram before 2030, despite conventional wisdom claiming that this price level would pressure automakers and other end-users to adopt alternatives.

"Surprisingly, the price of NdPr oxide surpassed US $170 per kilogram in Q1 of this year – exceeding even our wildest near-term expectations," Adamas penned in a recent briefing. "Not surprisingly, however, is that in the face of this price rise, over 90% of all EVs produced globally this year continue to use rare earth permanent magnet traction motors because they impart a system-level economic benefit that outweighs the experienced rise in rare earth input costs."

One of the reasons automakers are willing to pay higher prices for NdPr is that the magnets made from these materials offer the most efficient means of transforming electricity into motion, which equates to greater EV range. With EV range being one of the biggest consumer concerns and the already soaring costs of lithium-ion battery materials, it is expected that motor efficiency will trump cost savings.

"In the context of rising battery materials prices, copper prices and energy prices more broadly, our research indicates that rare earth magnet demand from automotive, wind power and many other high-growth end-use sectors is substantially less elastic to NdPr price than the dated industry rhetoric would suggest," Adamas penned in its report.

NdPr to cut anchor

The price for NdPr has dropped from the high of US$170/kg early this year to the current price of around $95/kg.

This drop is similar to other EV inputs, such as nickel, which spiked above US$20/lb in February before dropping to around US$10/lb; and copper, which hit a high of around $4.70/lb in February before dropping to the current $3.50/lb levels.

For NdPr, the weaker price is a combination of the worsening consumer confidence that is holding back metals prices and weak demand from the auto industry due to ongoing microchip shortages.

"As of 2021, automotive micromotors, sensors and loudspeakers were collectively responsible for nearly 15% of total global NdFeB (neodymium-iron-boron magnet) demand so ongoing poor performance from this segment has a materially negative impact on rare earth demand and prices, as we have seen this year," Adamas wrote. "Similarly, as of 2021, consumer electronics, powertools and appliances were collectively responsible for around 35% of total global NdFeB demand so it's no surprise that the current consumer confidence crisis sweeping across major economies is compounding the market's woes."

Adamas, however, says its market analysis shows that US$150/kg is required to induce the level of investments needed to meet the demand for NdPr that is being driven by an automotive sector transitioning to e-mobility.

The strategic minerals and metals analytical firm foresees the anchors currently holding NdPr oxide markets to be cut free over the next six to 18 months, allowing the price for this rare earth magnet material to sail back to levels needed to sustain growth driven by the transition to electric mobility.

"Will we see NdPr oxide prices do a 'lithium' anytime soon? Likely not, but we are confident that US$200 per kilogram is closer than many might expect," Adamas inked in its briefing.