MP Materials stock faces rare earth pricing challenges, Jefferies says

Investing.com - Jefferies said Friday that US and allied efforts to rebuild critical mineral supply chains are advancing, but progress remains uneven across rare earths and lithium markets.

Planned US NdFeB magnet capacity totals approximately 50,000 tonnes per year by 2030 across roughly seven projects, but most of this capacity targets lower-grade industrial magnets. SH-grade magnets used in automotive and wind applications remain largely unaddressed, with physical output lagging headline investment. Buy-rated MP Materials (NYSE: MP) now performs in-house separation at Mountain Pass after export restrictions prevented Shenghe in China from processing its concentrate, producing NdPr oxide and stockpiling inventories pending full downstream build-out.

Lithium prices reached a mid-cycle low near $8,000 per tonne LCE before spiking to roughly $25,000 per tonne, driven by the suspension of around 27 Jiangxi lepidolite mines, energy storage system demand growth, and pre-Chinese New Year restocking. Prices have since eased to around $20,000 to $21,000 per tonne, reflecting weaker China EV sales and Middle East ESS disruptions. Jefferies said carbonate is favored through around 2030 due to LFP chemistries and ESS deployments, with structural hydroxide oversupply persisting.

Global EV growth is estimated near 20% year-on-year in 2025, with energy storage installations expected to reach around 300 GWh in 2025 and more than double by 2030. LFP is expected to account for around 70% of EV packs in 2025 and remain dominant through 2030, while LMFP remains small at 20 to 30 kt in 2025 versus around 2.8 to 2.9 million tonnes of LFP.

Western supply chains are rebuilding with policy support and capital, but economies of scale, pricing power, and liquidity remain concentrated in China across rare earths, lithium, and battery materials through at least the end of the decade. China's anti-involution policy reduces the likelihood of Jiangxi restarts, with $18,000 to $20,000 per tonne viewed as a minimum sustainable lithium price.