ASX rare earths stocks have continued to gain attention this week amid booming demand, a new US-Australia deal, and ongoing US-China tensions.
On Tuesday, US President Donald Trump and Australian Prime Minister Anthony Albanese struck a deal to bolster rare earths and critical mineral supplies.
The US and Australia will boost investments to expand mining operations and processing of the minerals, reducing dependence on China's exports.
The deal comes amid ongoing trade tensions between the US and China, which continues to pile pressure on the market. China controls around 70% of global rare earths trade. The US has been focused on reducing its reliance on China and building up its own sovereign supply chains for some time.
Investors started snapping up shares in rare earths producers after China announced plans to restrict the export of rare earths earlier this month. In response to the move, the US threatened to put 100% tariffs on China.
Recent developments have put ASX-listed rare earths stocks firmly in the spotlight.
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ASX rare earths stocks in the hot seat
The Arafura Rare Earths Ltd (ASX: ARU) share price has surged 110% since early October, as investors scramble to get exposure to Australian rare earths stocks. At the time of writing on Thursday morning, Arafura shares are changing hands at 42 cents per share. The Australian mining company's flagship is the Nolans Rare Earths Project in Central Australia.
Northern Minerals Ltd (ASX: NTU) shares also surged this month, up 57.5%. At the time of writing, the mineral exploration company's shares are changing hands at 63 cents a piece.
Larger rare earths stocks like Lynas Rare Earths Ltd (ASX: LYC) and Iluka Resources Ltd (ASX: ILU) are also benefitting from the surge in interest.
Lynas shares are trading 9.69% higher than this time last month, at $18.12 per share at the time of writing. Meanwhile, Iluka shares are up 19.8% over the month and are trading at $7.34 each, at the time of writing.
What's next for the rare earths market?
Macquarie recently told investors that it expects a small deficit of NdPr (Neodymium and Praseodymium, two rare earths elements) for the remainder of the 2025 calendar year.
The broker also said it expects that supply gap to widen slightly in 2026 and 2027 and then return to a tight balance through to 2030.
There is limited analyst coverage or update on expectations for Arafura Rare Earths or Northern Minerals shares since the two saw their prices surge this month.
But TradingView data on Lynas Rare Earths and Iluka show analysts are relatively divided about their forecast over the next 12 months.
Out of 16 analysts which have rated Lynas shares, 3 have a buy or strong buy rating, 5 have a strong sell rating, and the remaining 8 have a hold rating. The maximum target price is $29.50, which represents a potential 64.4% upside at the time of writing, while the average target price is $15.13, which represents a potential 15.54% downside.
It's a similar story for Iluka shares too. Out of 12 analysts which have rated the stock, the majority (8) have a hold rating. A further 3 have a buy or strong buy rating and 1 analyst holds a strong sell rating on the shares.
The maximum target price for Iluka shares is $8.60, which represents a potential 16.29% upside at the time of writing. The average target price is $7.04, which is just below the trading price at the time of writing and therefore represents a potential 4.79% downside over the next 12 months.
