VanEck Rare Earth ETF Stuck Near Lows as Record Magnet Exports Meet Sliding Pr-Nd Prices

The VanEck Rare Earth and Strategic Metals UCITS ETF is painting a picture that its own portfolio companies seem unwilling to confirm. At 8.89 euros the fund sits barely above the 52-week low of 8.74 euros touched on Monday, and over the past 30 days it has shed 19 percent — a slump that has unfolded against a backdrop of genuinely strong operating news from the sector it tracks.

Take China's permanent magnet exports. September shipments of rare earth permanent magnets reached 6,165.12 tonnes, a year-to-date record, according to Shanghai Metals Market citing Chinese customs data. That marked a 23 percent jump from August and a 6.7 percent gain year-on-year. SMM analysts attributed the surge to the clearing of backlogged orders and ongoing trade negotiations. Shipments to the European Union climbed 20.5 percent month-on-month to 2,454 tonnes, the highest level since February, the South China Morning Post reported, linking the rebound to talks between Beijing and Brussels.

Lynas Delivers Where the Fund Does Not

Inside the ETF's portfolio, Lynas Rare Earths offered the clearest counterpoint to the gloomy price action. The producer booked gross revenue of AUD 310.1 million for the September quarter, up 55 percent year-on-year, while its average selling price leapt 88 percent to a record AUD 102.1 per kilogram. Lynas credited the gain to firmer market pricing, bundled sales and floor-price arrangements covering more than half of its output. Neodymium-praseodymium production also set a record at 2,082 tonnes.

The broader rare earth equity complex, however, has been anything but steady. USA Rare Earth gained roughly 13 percent in a single session, while an independent sector index dropped 4.83 percent on another day. Media reports could not pin the rally on any single trigger, with US-China trade talks and state support for critical minerals circulating as the dominant themes.

The Metal Beneath the Magnets Is Heading the Other Way

What the export figures obscure is the weakness in the underlying raw material. China's praseodymium-neodymium oxide market, the key input for permanent magnets, extended its decline through late October, with prices falling to 714,000 to 716,000 yuan per tonne as futures contracts continued to retreat. SMM blamed weaker cost support and sluggish transaction flow, noting that metal producers were buying only on an as-needed basis rather than stockpiling.

That matters directly for the ETF, whose holdings are tightly bound to rare earth price trends. The fund's late-October slide can be read from available price history, though media reports found no single identifiable trigger — the parallel weakness in the Pr-Nd market is regarded as relevant background rather than a confirmed sole cause.

The picture across individual metals is far from uniform. The China Rare Earth Industry Association's price index stood at 258.3 points on 28 October, with dysprosium oxide advancing while terbium and neodymium-rich mixed oxide gave ground. A broad recovery is nowhere in evidence; instead, the weight is shifting within the rare earth chain, with dysprosium holding comparatively firm against the weaker light rare earths. That divergence complicates matters for ETF investors, since the fund spans a wide range of companies along the value chain. Pr-Nd weakness hits magnet makers and miners with matching portfolio exposure hardest, while firms with heavier dysprosium exposure are likely to hold up better.

A Deadline in November and a Chipmaker Looking Elsewhere

Regulatory risk adds another layer. The suspension of certain Chinese export control measures from 2025 is scheduled to expire on 10 November, as set by China's Ministry of Commerce together with the General Administration of Customs. What follows is an open question — and it is likely to shape rare earth pricing in the weeks ahead.

Reuters reported separately that chipmaker TSMC is scouting alternatives for fab equipment in an effort to reduce its dependence on Chinese rare earth export controls. Such diversification by major buyers could shift demand dynamics in the sector over the medium term, even if it amounts to no immediate event for the ETF.

Monday brought a modest reprieve: the fund traded at 9.01 euros, up 1.1 percent on the previous day, a small rebound after weeks of downward pressure. Whether it holds may depend less on the export data than on a Pr-Nd price that has yet to find a floor — and on how the market reads whatever Beijing does after 10 November.