BEIJING - Prices of rare earth minerals are likely to stabilise in 2025 after a two-year downturn, as China slows mining output to protect domestic producers and growing demand from electric vehicles and humanoid robots eats away at a supply glut.

Prices are up 2% so far in January for the group of 17 elements key to products from lasers and electric vehicles to iPhones, after a fall of nearly two-thirds from a February 2022 peak, following the collapse of a furious rally amid oversupply.

China produces roughly 90% of refined rare earths and controls supply via strict quotas.

Analysts expect another year of tight control over growth in 2025 and buoyant demand from end-users in the clean energy industry should support prices this year.

An end to the two-year downturn spells relief for producers nursing heavy losses, while boosting projects outside China that are part of Western governments' efforts to build a supply chain that will cut reliance on China for critical minerals.

"A little bit of a market reversion is a good thing for our business ... the same way it's a good thing for miners," Scott Dunn, CEO of Noveon Magnetics, the only US maker of sintered NdFeB magnets used in electronics, told Reuters in an interview late in December.

The surplus of neodymium praseodymium (NdPr) oxide, a closely-watched rare earth product used to make magnets vital to electronics, will narrow to 500 t in 2025 from 5 400 t in 2024, Guolian Securities has forecast.

Demand for NdFeB magnets used in wind turbines and electric vehicles will grow by more than 15% in 2025, said Willis Thomas, an analyst at consultancy CRU Group, who expects strong demand to push NdPr supplies into deficit this year.

Analysts also highlighted China's trade-in scheme, which subsidises purchases of new equipment by consumers and businesses, and electric vehicle subsidies unveiled in July, as potential contributors to stronger demand this year.

SLOWING SUPPLY GROWTH

Supply growth in China is expected to stay constrained as Beijing keeps tight control over mining quotas to ease pressure on its miners and conserve supplies of the strategic resource, analysts say.

Rare earth quotas in China this year are forecast for a similarly subdued level as last year, according to Thomas and Daan De Jonge, an analyst at Benchmark Mineral Intelligence.

Mining output and smelting and separation quotas in 2024 rose by just 5.9% and 4.2%, respectively, versus increases of 21.4% and 20.7% in 2023.

Additionally, Chinese firms will find it hard to scale up existing production while abiding by environmental regulations on rare earth mining in China, said Thomas.

But BMI's Jonge believes it will take some time for lower supply growth to meaningfully affect the market balance.