How the Iran Conflict Could Impact the Price of Magnets

(Implications for the global NdFeB supply chain and buyers of permanent magnets)

The recent escalation involving Iran has raised concerns across global commodity markets—from oil to semiconductors. While Iran itself is not a major producer of rare earth elements, the conflict could still affect the price and availability of permanent magnets, particularly neodymium-iron-boron (NdFeB) magnets used in electronics, defense systems, EVs, and industrial equipment.

For companies that rely on magnet supply chains—the effects are likely to come from indirect geopolitical and economic shocks rather than direct material shortages.

Below are the key mechanisms through which the Iran conflict could influence magnet prices.

1. Energy Price Spikes Could Increase Magnet Manufacturing Costs

One of the most immediate risks of a conflict involving Iran is disruption to Middle Eastern energy supply—particularly shipping through the Strait of Hormuz, a critical oil corridor.

Higher oil and natural gas prices directly increase the cost of:

Rare earth mining
Metallization and alloy production
Sintering and magnet processing
Global shipping and logistics

Rare earth processing is extremely energy-intensive, particularly the separation and metallization stages. If energy costs rise significantly, the cost of producing NdFeB magnets will increase across the supply chain.

For example, magnet manufacturers in China, Japan, and Europe rely heavily on electricity and high-temperature furnaces. Energy shocks historically translate into higher rare earth oxide prices and higher magnet pricing within months.

2. Supply Chain Risk Premiums Could Push Prices Higher

Markets tend to price geopolitical risk into critical materials. Even if supply remains intact, buyers often begin stockpiling magnets and rare earth oxides, which tightens the market.

This behavior has already appeared in previous geopolitical crises involving rare earths.

China currently dominates the magnet ecosystem:

~70% of global rare earth mining
~90%+ of rare earth processing
~85–90% of permanent magnet production

When geopolitical tensions rise—whether due to Middle East conflict or U.S.–China relations—manufacturers often secure larger buffer inventories. That surge in demand can temporarily drive prices upward.

3. Defense Demand for Rare Earth Magnets May Increase

Military conflicts significantly increase demand for technologies that rely on rare earth magnets, including:

Precision-guided missiles
Drones and UAVs
Radar systems
Aircraft actuators
Naval propulsion systems

Rare earth materials such as samarium, gadolinium, and yttrium are already being targeted for expanded supply by the U.S. Department of Defense due to rising geopolitical tensions.

If military procurement ramps up globally, magnet demand for defense applications could tighten supply for commercial markets, particularly for:

High-temperature grades (H, SH, UH)
Samarium-cobalt magnets
High-performance NdFeB used in aerospace systems

4. Shipping and Logistics Disruptions Could Delay Magnet Supply

The Middle East is a major hub for global shipping routes between Asia and Europe. Any disruption in the region could lead to:

Longer shipping routes
Higher insurance premiums for cargo
Increased freight costs

Even though magnets are primarily produced in East Asia, shipping disruptions can still affect the cost and reliability of deliveries for global buyers.

For distributors and OEMs, this could mean:

Longer lead times
Increased freight costs
Higher landed magnet prices

5. China Could Use Rare Earth Supply as Geopolitical Leverage

The biggest wildcard in magnet pricing is China’s control of the rare earth processing industry.

China already maintains export controls on several rare earth materials and technologies used to manufacture magnets.

If tensions escalate into broader geopolitical conflict, Beijing could theoretically:

Restrict exports of rare earth oxides
Limit magnet exports
Slow export approvals

Because China produces nearly 90% of the world’s permanent magnets, any restriction—even temporary—could trigger a rapid spike in global magnet prices.

6. The Immediate Impact May Be Limited

Despite the potential risks, early industry data suggests that the Iran conflict has not yet significantly disrupted the rare earth market.

For example:

China exported only about 67 metric tons of magnets to Iran in 2025, representing just 0.11% of its total magnet exports.

This means the conflict does not directly remove a major market or supplier from the magnet ecosystem.

However, secondary effects—energy prices, defense demand, and geopolitical tensions—remain the real drivers to watch.