CME explores world's first rare earth futures contract, sources say

Sources told Reuters that CME Group is working on plans for a futures contract combining neodymium and praseodymium (NdPr), and rival ICE is also exploring rare earth futures; no final decision has been taken.

CME Group's CME‑Q is reported to be developing plans for what sources describe as the world's first futures contract for rare earths. The proposed contract would combine neodymium and praseodymium (NdPr), two elements commonly traded together and used to make permanent magnets for EV motors, wind turbines and certain defense systems. Rival Intercontinental Exchange is also said to be studying rare earth futures, though sources describe ICE as less advanced in planning. The issue has drawn attention because China currently dominates processed rare earth supply and price-setting, and Western governments and firms are seeking market tools to manage exposure. Reported details: - Sources told Reuters that CME is working on a new NdPr futures contract intended to cover the two most important rare earths for permanent magnets. - The article reports that no final decision has been taken; CME declined to comment and ICE did not immediately respond to requests for comment. - Rare earths are a group of 17 elements described as important for the energy transition, electronics and the defense sector. - The article states China controls about 90% of processed rare earth material and that NdPr prices are widely set in China through price reporting agencies and local exchanges. - Reported challenges include thin trading volumes, a relatively small market size compared with other metals futures, and difficulty for some non‑China projects to secure financing without hedging tools. - The article notes CME has previously launched lithium and cobalt futures, and that the U.S. recently announced a $12 billion strategic stockpile and a preferential trade bloc for critical minerals. Summary: If launched, the NdPr futures contract would create a new reference price and a possible hedging tool for governments, companies and banks exposed to rare earths. No final decision on a launch has been taken and planners face challenges from thin trading and volatile prices. Undetermined at this time.