Rare earth magnets (NdFeB and SmCo) are the strongest commercially available magnets in 2026.
The high-performance nature of rare earth magnets make them critical materials for key applications ranging from electric vehicle motors and wind turbine energy generators to industrial robotics actuators and mission-critical defence infrastructure.
The criticality of rare earth magnets is further compounded by the consolidation of their supply chain in China, which accounts for over 90% of global production in 2026.
Consequently, recent market activity has been dominated by the industry’s response to the introduction of sweeping Chinese export controls on high-performance magnets and heavy rare earths in 2025.
These have resulted in highly disruptive supply constraints, price volatility and national security concerns, instigating governments and OEMs worldwide to make the establishment of a resilient ex-China rare earth magnet supply chain a strategic priority.
This has provided a strong market driver for the announcement of many major capacity expansions outside China, particularly in the US where an aggressive mine-to-magnet buildout continues to gather pace.
Forecasting from IDTechEx’s research report, ‘Rare Earth Magnets 2027-2037: Technologies, Supply, Markets, Forecasts’, shows that China’s share of global production capacity will fall to 75% by 2037 as competition from other regions grows.
However, further IDTechEx analysis highlights that a significant global overcapacity may develop as growth in demand lags behind the rapid expansion of an increasingly divided supply chain.
US ramps up its domestic mine-to-magnet value chain
The US mine-to-magnet buildout has accelerated in 2026, with the onshoring of a vertically integrated rare earth magnet value chain designated as mission-critical to ensuring the security of US defence and aerospace supply chains.
Consequently, the rapid expansion of US-based magnet producers has intensified ahead of an upcoming January 2027 deadline for the elimination of Chinese-origin rare earth magnets from US military supply chains, a key market driver that compounds rising demand from commercial OEMs.
IDTechEx forecasts that US rare earth magnet production will increase over 20x by 2037, resulting in the US becoming the world’s second-largest magnet producer by 2030.
This explosive growth in US magnet production has been instigated by $7-billion in strategic government investment.
Key players including MP Materials, USA Rare Earth and Energy Fuels have capitalised by expanding their mining and processing assets across North America, Brazil and Australia, while also pursuing the strategic acquisition of leading ex-China rare earth metal and magnet players such as the UK’s Less Common Metals and Germany’s Vacuumschmelze.
In addition, the US government has also committed to stockpiling measures (“Project Vault”) and reached price floor agreements for rare earth oxide purchases with key players, with the latter viewed as essential to ensuring the long-term commercial viability of upstream players.
Most recently, July 2026 saw the US introduce export restrictions on end-of-life magnets as it looks to retain critical material-rich waste within circular domestic supply chains.
IDTechEx believes that this federal support for circularity provides a significant market opportunity for emerging rare earth recycling players, who are looking to capitalise as the increasing volumes of magnet manufacturing scrap (“swarf”) produced by new US players provides a growing secondary feedstock stream.
Surging magnet capacity could push the market into overcapacity
Global demand for rare earth magnets will grow 1.5x over the next 10 years, driven by key growth markets including humanoid robots, wind energy and AI data centres.
However, IDTechEx expects the rare earth magnet market to become increasingly competitive as its supply chain, pricing structures and customers become further divided across China and its geopolitical rivals, resulting in the emergence of a two-tier market.
Leading Chinese magnet players continue to expand at pace (exemplified by Giastar Magnet’s ongoing construction of a new 100 ktpa magnet facility), compounding the rapid growth of competitors abroad.
Consequently, IDTechEx expects the expansion of global rare earth magnet production capacity to significantly outstrip demand growth, resulting in worldwide capacity utilisation falling to 59% in 2037. This poses the risk of a global rare earth magnet overcapacity, which could result in lower prices that hinder the ability of emerging ex-China magnet players to maintain profitability.