Between soaring and plummeting - the prices of strategic metals are often subject to strong fluctuations. We explain the global developments behind this and what this means for buyers of tangible assets.
The prices of commodities such as rare earths or platinum group metals can swing sharply upwards or downwards. The markets are volatile, i.e. susceptible to fluctuations, as the value is determined solely by the relationship between supply and demand. Some factors influence this interplay, and we will introduce you to the decisive ones.
These 5 factors determine the pricing of commodities
Political decisions
Government measures can directly influence commodity prices. One example: In China, electromobility is being driven by high subsidies. Rare earths are used in the permanent magnets of electric motors. In order to cover the expected increase in demand for these raw materials, the Chinese government increased the production quotas for rare earths by 19 per cent at its peak since 2023explains Frank Meier, raw materials expert at TRADIUM. The country determines the amount of rare earths that individual companies have to produce through so-called production quotas. In other countries, on the other hand, such as Germany, the Demand for e-cars falls short of expectations. This was partly due to government purchase incentives, which were only temporary. The slowdown in the growth of e-mobility is seen as one - albeit not the decisive - reason for this. Factor for the current comparatively low price level for rare earths.
Another example of how political decisions can influence prices are various export requirements from China, including for Germanium or gallium. The People's Republic justifies the regulations with national security. In the summer of 2023, the country introduced export restrictions for the two technology metals. As a result, their Prices rise sharply in some cases - and continue to do so today.
Technological progress
Demand for certain raw materials can skyrocket when they are needed for new technologies. This is particularly the case in emerging areas such as artificial intelligence. Gallium arsenide, for example, is needed for high-performance chips. Powerful computing chips are now so central that they have become part of a trade conflict between the USA and China that has been going on for years. In addition, rare earths and a range of other raw materials, for example for the Production of industrial robots necessary. The latter are increasingly taking on tasks that are physically strenuous, monotonous or require constant high precision. The demand for these future technologies is likely to increase and drive up the prices of individual raw materials.
Impaired supply chains or supply bottlenecks
Global trade routes are the backbone of the supply of raw materials. But they are susceptible to crises and conflicts. A current example: due to the Attacks by Houthi rebels in the Red Sea For over a year now, ships have either taken a diversion via the southern tip of Africa, with longer transport routes and additional fuel costs. Or they pay significantly higher insurance premiums in order to be able to pass through the area despite the danger and not be left holding the bag for possible damage. Both are very cost-intensive and also lead to a shortage of goods at the destinations. These disruptions to supply chains and rising costs could have an impact on commodity prices in the medium term, says Frank Meier, assessing the current situation.
Shortage on the market due to stockpiling
The industry is building up its stocks of sought-after raw materials in order to secure its long-term future. This was the case in Summer 2024 at Rhenium, for example This is the case, for example, for aircraft turbine blades or in industrial catalytic converters: Some companies replenished their stocks and others followed suit. This chain reaction led to a Short-term price increase of up to 24 per cent within a few weeks, reports Frank Meier.
Another example: After the coronavirus pandemic, many companies in the air transport sector have reorganised themselves with raw materials such as hafniumafter previously being reluctant to buy due to the significantly lower volume of flights. The metal ensures that turbines are more resistant to heat and corrosion. The boom in demand in 2023 consequently caused the price of hafnium to skyrocket: In October 2023, the value was a full 120 per cent above the 2012 level.
Security situation
The number of conflicts and wars is increasing and more and more nations are arming themselves. In Europe, too, the focus has been on defence for some time now. With the "REARM Europe", 800 billion euros are to be invested in security and resilience. The aim of the plan is to Military armament and security infrastructure in Europe. Both are raw material-intensive sectors that are likely to increase demand for individual metals. In the case of germanium, which is indispensable in military equipment such as night-vision goggles, the increased demand has already been reflected in higher prices since summer 2024. In March 2025, the value was 37 per cent above the previous year's level. The export restrictions for germanium mentioned under "Political decisions" also had an impact on pricing.
Frank Meier expects more countries to increase their defence spending. The market could gain even more momentum as a result.
Developments on the commodity markets show this: Volatile prices are often the result of global changes and political decisions. For buyers of strategic metals as tangible assets, this dynamic can be an opportunity. However, when purchasing some things to consider.
Note for the purchase of tangible assets at TRADIUM: You should pay attention to this with strategic metals whose prices are volatile
Buyers of tangible assets can capitalise on the volatility of strategic metal prices. It offers opportunities for price gains, but also implies the risk of losses. In terms of risk management and to prevent excessive volatility from affecting the portfolio, buyers of tangible assets should select their commodities carefully and diversify them widely. In addition to metals, whose prices fluctuate strongly, there are commodities whose values remain relatively stable. It can also be a good idea to ignore fluctuations. These are usually balanced out by long-term effects. A holding period of several years therefore makes sense.
