US Rare Earth Pricing System is Poised to Challenge China's Dominance

Commodity

Summary:

The West has struggled to weaken China's grip on 90% of the supply of rare earths, in part because low prices set in China have removed the incentive for investment elsewhere.

U.S. efforts to break China's dominance of the rare earths market and to drive investment in its own industry have moved up a gear with a Washington-backed plan to create a separate, higher pricing system.

The West has struggled to weaken China's grip on 90% of the supply of rare earths, in part because low prices set in China have removed the incentive for investment elsewhere.

Miners in the West have long called for a separate pricing system to help them compete in supplying the rare earths group of 17 metals needed to make super-strong magnets of strategic importance. They are used in military applications such as drone and fighter jets, as well as to power motors in EVs and wind turbines.

Under a deal made public last week, the U.S. Department of Defense will guarantee a minimum price for its sole domestic rare earth miner MP Materials, at nearly twice the current market level.

Las Vegas-based MP already produces mined and processed rare earths and said it expects to start commercial magnet production at its Texas facility around the end of this year.

Analysts say the pricing deal, which takes effect immediately, should have global implications - positive for producers, but may increase costs for consumers, such as automakers and in turn their customers.

"This benchmark is now a new centre of gravity in the industry that will pull prices up," said Ryan Castilloux, managing director of consultancy Adamas Intelligence.

The DoD will pay MP the difference between $110 per kilogram for the two most-popular rare earths and the market price, currently set by China, but if the price rises above $110, the DoD will get 30% of additional profits.

Castilloux said other indirect beneficiaries of the pricing system may include companies, such as Belgian chemicals group Solvay, which launched an expansion in April.

"It will give Solvay and others the impetus to command a similar price level. It will give them a floor to stand on, you could say," Castilloux added.

While Solvay declined to comment, other rare earth miners, developers and their shareholders welcomed the news.

Aclara Resources is developing rare earths mines in Chile and Brazil, as well as planning a separation plant in the United States. Alvaro Castellon, the company's strategy and development manager, told Reuters the deal added "new strategic paths" for the company.

MP'S GRADUAL OUTPUT INCREASE

MP Materials, which suffered a net loss of $65.4 million last year largely because of China's low pricing, will build up magnet production at its Texas plant initially to 1,000 metric tons a year, later expanding to 3,000 tons a year.

Under last Thursday's deal, the DoD will become its largest shareholder with a 15% stake and MP will construct a second rare earth magnet manufacturing facility in the U.S., eventually adding 7,000 tons per year. In total, production would be 10,000 tons a year - equalling U.S. consumption of magnets in 2024.

That does not include, however, the 30,000 tons imported by the United States already installed in assembled products, Adamas consultancy said.

It predicts global demand for rare earth permanent magnets will more than double over the next decade to about 607,000 tons, with the U.S. seeing the strongest percentage annual growth rate in coming years at 17%.

The world's reliance upon China for much of this demand was brought into focus by China's curbs on its exports as trade negotiations continue between the United States and China.

So far Western governments have had little success in trying to help their own industries to compete.

Attempts to agree stronger pricing have been confined to piecemeal deals that set premiums for magnets.

Dominic Raab, a former deputy prime minister and former foreign secretary for the United Kingdom, said he was not surprised the Trump administration had concluded that tax breaks alone would not create the level of investment required.

"The next step is, can they scale it up?" asked Raab, now head of global affairs at Appian Capital Advisory, a private equity firm that invests in mining projects.

The $110 level for neodymium and praseodymium, or NdPr, guaranteed by the DoD is slightly above a $75-to-$105 per kg range that consultancy Project Blue reckons would be needed to support enough production to meet demand in coming years. It compares to a current level of about $63.

David Merriman of Project Blue said it was unclear how commercial industrial consumers would respond to higher prices and whether it would make them invest in rare earths as they have more diverse supply sources.

"Major non-government backed consumers are less likely to follow this same investment pattern, however, as they are not so clearly aligned to a particular regional supply route," he said.

A spokesperson for German auto giant Volkswagen declined to comment on pricing when asked about the DoD floor level but said: "We welcome all efforts to strengthen long-term stability and diversification in global supply chains for critical materials."

Source: Reuters

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Owen Li

Central Bank

U.S. President Donald Trump's threatened 30% tariff on European Union imports is complicating the European Central Bank's decision-making but is unlikely to derail plans for a pause in rate cuts next week, five ECB policymakers told Reuters.

The ECB signalled after its June meeting that it was likely to keep interest rates unchanged on July 23-24.

But the 30% duty floated by Trump is steeper than the ECB had anticipated even under the most negative of three scenarios for the euro zone economy it released last month.

That means the ECB has been forced to come up with new estimates and policymakers to contemplate a more negative outcome than they thought possible in June, said the five sources, all members of the ECB's Governing Council.

They said governors remain reluctant to act on the basis of what is still a threat, however, especially given the sometimes contradictory statements made by Trump's administration since his first announcement of global tariffs in April. Any discussion about rate cuts is therefore likely to be kept for the ECB's September meeting, the sources said.

Trump said on Sunday that his tariffs would kick in on August 1, and the European Commission has also paused its countermeasures until that date.

Market economists have largely said they think it unlikely that Trump will follow through with his tariff threat because of the damage it would cause to the U.S. economy in terms of higher inflation and lower growth.

But should the 30% levy be imposed, they expect the ECB to cut interest rates in response.

Barclays analysts predicted a lowering of the ECB's deposit rate to just 1% by next March from 2% now if the U.S. imposes an average tariff rate on EU goods of 35%, which they estimated would subtract 0.7 percentage points from euro zone growth.

The ECB's latest macroeconomic projections, released in June, pointed to a gradual recovery in the euro zone economy in coming years, with inflation hovering around its 2% target.

Those projections assumed as their baseline a 10% tariff on EU good exports to the U.S., which would put euro zone economic growth at 0.9% this year, 1.1% next year and 1.3% in 2027.

But forecasts under an alternative scenario released at the same time showed that a 20% U.S. tariff would curb growth by 1 percentage point over the same period and also pull down inflation to 1.8% in 2027, from 2.0% in the baseline scenario.

Source: Yahoo Finance

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Devin

Economic

White House economic advisor Kevin Hassett speculated Monday that new tariff policies are not yet sparking widespread price inflation because President Donald Trump has convinced more people to buy American.

"There's, I think, a lot of patriotism in the data," Hassett said on CNBC's "Squawk Box" when he was asked to explain why Trump's protectionist policies have not stoked higher prices, despite warnings by many economists.

The National Economic Council director pointed to a recent White House report, which found prices of imported goods fell between December and May.

"My theory, as an economist, of why that is, is that Americans, because of President Trump's leadership, have recognized that when they buy an American product, they not only get perhaps a better product, certainly a better product most of the time, but they're also making their community stronger," Hassett said.

"The bottom line is, people prefer American products," he said.

"Therefore, the demand for imports has gone way down, so much that even with what tariffs have been there, where people would say, 'Oh, they might increase prices at least a little bit,' we've seen prices going down."

Hassett also argued that countries with which the United States has trade deficits are eating the cost of the tariffs, instead of passing on higher prices to American consumers.

Trump's tariffs are still expected to lead to higher prices this year.

And critics have noted that Trump has at least temporarily pulled back on some of his biggest tariff plans, including many announced during his "liberation day" in early April.

Others note that many importers stockpiled goods in anticipation of incoming tariffs, muting the near-term effects of the duties on prices.

Ernest Tedeschi, director of economics at the Budget Lab at Yale, wrote that the methodology used in the White House's report "will understate tariff effects in their import indices."

Tedeschi, who served as the top economist at the White House Council of Economic Advisers under former President Joe Biden, also cited data from Harvard University's Pricing Lab showing that prices on imported goods have risen since early March, when U.S. tariffs on Canada, Mexico and China took effect.

Source: CNBC

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Thomas

Economic

Commodity

The big Monday announcement by President Trump... just the threat of more secondary tariffs on Russia? And venting a little more frustration at no peace progress.

TRUMP: SEVERE TARIFFS ON RUSSIA IF NO DEAL IN 50 DAYS
TRUMP THREATENS TO IMPOSE 'SECONDARY' TARIFFS ON RUSSIA
TRUMP REITERATES VERY UNHAPPY WITH RUSSIA
TRUMP: MADE DEAL TODAY TO SEND WEAPONS TO UKRAINE
TRUMP: IT'S ALL TALK THEN MISSILES GO INTO KYIV AND KILL
TRUMP: UKRAINE WILL TAKE THE MILITARY EQUIPMENT FROM NATO
TRUMP SUGGESTS MORE DYING IN UKRAINE WAR THAN PUBLICLY KNOWN
TRUMP: SECONDARY TARIFFS VERY POWERFUL

If this is "it"... the "major announcement" on Russia that was planned, then we will say it could have been a lot worse in terms of escalation (such as ramping up more offensive weapons deliveries to Kiev), but amid Trump perhaps poorly managing expectations, people will be asking: that was it? Even RT is chiming in with some light mockery...

Given markets were expecting something more 'huge' - oil prices pushed lower on the news of another lengthy timeline of "if no deal in 50 days"...

And yes, there will be some more weapons sent to Ukraine, Trump stated, but they will come via NATO allies, primarily.

Monthly US imports from Russia

As if the Big Beautiful Bill's spending increases, the bombing of Iran, mixed signals on immigration and the suppression of the Epstein files weren't enough to infuriate Trump voters, now comes news that President Trump is going to announce what a top DC warmonger calls an "aggressive" transfer of offensive weapons to Ukraine. Under the novel arrangement, European countries are supposedly going to foot the bill.

Last week, the administration announced that weapons shipments that had just been halted by Defense Secretary Pete Hegseth over concerns about the depletion of America's own arsenal were being given a hasty green light after all. Trump broke the news on Monday after last week's "disappointing" phone call with President Putin, telling reporters he would send “more weapons” to Ukraine. Critically, Trump had emphasized that these would be "defensive weapons primarily."

Now, two sources tell Axios that it's likely a new weapons package will include long-range missiles capable of attacking deep inside Russia to include Moscow. They noted that a final decision hadn't been made. "Trump is really pissed at Putin. His announcement tomorrow is going to be very aggressive," warmongering South Carolina Sen. Lindsey told Axios.

While MAGA nation and libertarian-minded Trump voters will be disgusted, it's like a second Christmas in a month for Graham. First delighted by Trump's decision to engage the US military in Israel's war on Iran, long-time Ukraine-meddler Graham is now enthusing over Trump's new escalation. "The game...is about to change," said Graham in a Sunday appearance on Face the Nation. "I expect in the coming days you will see weapons flowing at a record level...[and] there will be tariffs and sanction available to President Trump he's never had before."

The transaction is expected to be announced Monday when Trump meets with NATO Secretary General Mark Rutte. This time around, European countries are expected to pay for American weapons bound for Ukraine. "Basically, we are going to send them various pieces of very sophisticated military [equipment]. They're going to pay us 100% for them," Trump told reporters on Sunday. "As we send equipment, they're going to reimburse us."

The new arrangement sprang from a suggestion made by Ukrainian President Volodymyr Zelensky at a NATO summit in late June. Striking an exceedingly Trump-like tone, an unnamed US official told Axios, "Zelensky came like a normal human being, not crazy, and was dressed like a somebody that should be at NATO. He had a group of people with him that also seemed not crazy. So they had a good conversation."

Trump was reportedly angered by his July 3 phone call with Putin, in which the Russian president made clear his intention to escalate the war. Sure enough, that very night Russia launched an apparently record-setting overnight drone attack on Ukraine - said to be among the largest since the war began.

According to the new report, Western and Ukrainian officials are hoping an infusion of weapons will alter Putin's calculus about his war aims and terms for a ceasefire if not an end to it.

Russia had been gradually but relentlessly taking over more territory (via Institute for the Study of War)

During his 2024 campaign, Trump repeatedly vowed to bring a quick end to the war, variously claiming that he would get it "settled before I even become president" or, at worst, "within 24 hours" of doing so. Now, nearly 6 months into his term, Trump is about to pour more weapons into the 3 1/2-year old war.

In doing so, Trump gives us yet another illustration of Tom Woods' Law #3: "No matter whom you vote for, you always wind up getting John McCain."

Source: Zero Hedge

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James Whitman

Political

Palestinian-Israeli conflict

President Donald Trump announced Monday that the United States will impose "very severe tariffs" on Russia in 50 days if no deal is reached to end the war in Ukraine.

During a meeting with NATO Secretary General Mark Rutte in the Oval Office, Trump revealed that an agreement had been made to send weapons to Ukraine. "Made deal today to send weapons to Ukraine," Trump stated.

The president added that the U.S. would be "sending the best to NATO" and that the effort "will be coordinated by NATO."

Trump expressed disappointment with Russian President Vladimir Putin during the Oval Office meeting, where he sat side-by-side with Rutte.

The NATO Secretary General emphasized European participation in the initiative, stating, "This is Europeans stepping up" and "European countries want to be part of it." Rutte described the current support as "the first wave," indicating that "there will be more."

Rutte also confirmed that participating countries would "move equipment quickly into Ukraine" as part of this coordinated effort.

Source: Investing

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Adam

Economic

This will be a jam-packed week for economic indicators and big banks’ Q2 earnings reports. We are relatively optimistic about the latter, which should be bullish for the stock market. The inflation news may show some signs of tariff-related warming. Consumer-related data are likely to be mixed.

The White House will probably keep tariffs and the Fed in the news on a daily basis. On balance, we expect the stock market to be choppy over the remainder of the summer into early fall before a year-end rally. The stock market’s V-shaped pattern during H1 should look more like a square-root sign in the coming months.

Consider the following:

S&P 500 earnings.

Q2’s earnings reporting season should start out this week with a bang as lots of big banks report strong earnings. Industry analysts have been lowering their earnings estimates for S&P 500 companies over the past several weeks, bringing their earnings growth expectations down to 3.5% y/y as of the July 10 week (chart). That should be easy to beat. We expect to see actual earnings rise by twice that much.

Markets Week Ahead: Strong Bank Earnings, Sticky Inflation Could Jolt Summer Lull_1

CPI and PPI

So far, the impact of Trump’s tariffs has been difficult to spot in hard inflation data. That may be about to change, albeit modestly, with June’s CPI report (Tue). The Cleveland Fed’s Inflation Nowcasting is showing a 3.0% y/y increase in this inflation rate, up from 2.8% in May (chart).

June’s PPI report (Wed) might confirm that the downward trend in inflation has been interrupted at least on a transitory basis by Trump’s tariffs. That may be enough to keep the Fed on hold.

Markets Week Ahead: Strong Bank Earnings, Sticky Inflation Could Jolt Summer Lull_2

Retail sales

The sizable 0.9% drop in retail sales in May, the first back-to-back monthly decline since the end of 2023, was offset by the month’s "core group," which was up 0.4% (chart). June’s retail sales report (Thu) could also be a mixed bag, with auto sales weak again and a small increase in the control group. Our Earned Income Proxy for private industry wages and salaries in personal income was flat last month.

Markets Week Ahead: Strong Bank Earnings, Sticky Inflation Could Jolt Summer Lull_3

Anticipation of Amazon (NASDAQ:AMZN)’s Prime Day, the annual deal event on July 8-11, might have reduced online shopping last month. However, there’s no sign of that happening in the weekly Redbook retail sales series, which remains robust (chart). That’s consistent with the low readings for weekly initial unemployment claims (Thu).

Markets Week Ahead: Strong Bank Earnings, Sticky Inflation Could Jolt Summer Lull_4

Industrial production

June’s industrial production (Wed) probably edged down, given that manufacturing aggregate weekly hours fell slightly last month (chart). The New York Fed’s July Empire State Manufacturing Index (Tue) could show signs of stabilizing following a surprisingly weak -16.0 reading in June.

Markets Week Ahead: Strong Bank Earnings, Sticky Inflation Could Jolt Summer Lull_5

Fed fight

A number of Fed officials will have their chance at publicly parsing this week’s economic indicators. Among top Fed policymakers giving speeches are: Governors Michelle Bowman (Tue), Michael Barr (Tue and Wed), Adriana Kugler (Thu), and Christopher Waller (Thu). It will be interesting to see whether any of them takes sides in the Great Fed Fight between Trump and Fed Chair Jerome Powell. The President has been attacking Powell almost daily of late for not lowering interest rates.

Trump still wants Powell gone before his term as Fed chair expires in May 2026. Though the Supreme Court complicated his hopes to fire Powell, Trump World is getting quite creative about grounds for termination. Case in point: arguing that Powell mismanaged renovations at Fed headquarters and lied to Congress about the project.

source : investing

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Warren Takunda

Cryptocurrency

Key points:Bitcoin surfs exchange order-book liquidity as huge gains plateau at around $120,000.

Bid support suggests a return below $119,000 next as part of an anticipated retest.

One trader warns of a potential “pump and dump” ploy to trap late buyers at higher levels.

Bitcoin consolidated gains at the Monday Wall Street open as analysts braced for a BTC price correction. "Don't Get Trapped! Bitcoin Price Analysis Sees Dip With $118.8K in Focus"_1

"Don't Get Trapped! Bitcoin Price Analysis Sees Dip With $118.8K in Focus"_1

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView

BTC price cools amid “rug pull” warning

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD circling $121,000 as the week’s first US trading session began.

New all-time highs near $123,250 had capped a blistering rally earlier today, with Bitcoin still up over 10% in a week.

While many expected the market to pause for breath after such rapid upside, trading resource Material Indicators was cautious.

“Don't get trapped!” it warned followers in its latest post on X.“That $BTC buy wall at $120.5k seems like it may be there to lure in late longs before a support test.”

BTC/USDT order-book liquidity data. Source: Material Indicators/X

An accompanying chart showed order-book liquidity for the BTC/USDT trading pair on largest global exchange Binance.“Watch out for a rug pull if price gets close,” Material Indicators added. “The cycle top is not in yet, but there should be a support test before a sustainable run through $130k.

”As Cointelegraph reported, order-book liquidity manipulation has played a key role in short-term BTC price action in recent months, with large-volume traders shifting bids and asks around to attract price in a certain direction.

The latest data from CoinGlass on the day highlighted key support beginning at $118,800, leaving the door open for a roughly 2% correction next.

Total BTC short liquidations in the 24 hours to the time of writing were $432 million.Binance BTC/USDT liquidation heatmap. Source: CoinGlass

“We need to be aware of more manipulation,” popular trader CrypNuevo continued in his own X analysis on the day.“This could also be part of a pump-and-dump weekly pattern. Caution.”

"Don't Get Trapped! Bitcoin Price Analysis Sees Dip With $118.8K in Focus"_4

BTC/USDT 4-hour chart. Source: CrypNuevo/X

Pro traders stay “selective” at $120,000

Amid a lack of classic signs of “FOMO,” trading firm QCP Capital saw ground for continued optimism.“This could reflect a maturing market dynamic, and the same could be said for ETH,” it wrote in its latest bulletin to Telegram channel subscribers.

“Another consideration is that traders may be opting to express directional views through perpetuals rather than options, given the elevated cost of optionality in fast-moving markets.”

QCP suggested that traders may wish to hedge against low-timeframe volatility “while maintaining a longer-term bullish outlook.

”“We maintain our structurally bullish view on BTC, underpinned by continued institutional inflows and macro tailwinds,” it concluded.

“However, at current levels, we prefer to be selective and are holding back from chasing the rally in favour of positioning on a pullback, should it occur.”