• 4 minutes 5 Tweets That Change The World?
  • 7 minutes Trump Tariffs NOT China's Biggest concern. Chinese Shadow Banking Bigger. What is Shadow Banking You Ask ?
  • 11 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 15 minutes Glory to Hong Kong
  • 3 hours Trump will capitulate on the trade war
  • 8 hours China's Blueprint For Global Power
  • 3 hours Support Held. Back in UGAZ
  • 22 mins The power of propaganda has no boundaries: Which country has larger territory US od China
  • 7 hours Any difference btw Hunter Biden on BOD of Ukraine Company vs. Qatar bailout of Kushner Real Estate 666 Fifth Ave ?
  • 10 hours PETROLEUM for humanity 
  • 36 mins Iranian Oil Tanker struck by missiles off Jeddah
  • 2 hours Crazy Stories From Round The World
  • 12 hours How The US Quietly Lost The 1st Amendment
  • 9 hours ISIS Prisoners Escape Syria Camp After Turkish Shelling. Woohoo!
  • 5 hours China 2019 - Orwell was 35 years out
  • 12 hours Leftists crying to make oil patch illegal friendly: 'Broken system' starves U.S. oil boom of immigrant workers: CONGRESS DO YOUR JOBS INSTEAD OF PANDERING!
  • 7 hours Total SA In Expansion: $600 million For India's Adani Gas

Breaking News:

Russia: OPEC+ Deal Will Not Be Revised

Alt Text

Vanadium Spikes On New Chinese Regulations

A new regulatory measure in…

Alt Text

Chinese Rare Earth Exports Tumble As Trade War Accelerates

China, the world’s largest producer…

Stuart Burns

Stuart Burns

Stuart is a writer for MetalMiner who operate the largest metals-related media site in the US according to third party ranking sites. With a preemptive…

More Info

Premium Content

China Continues to Reduce Rare Earth Production as Prices Fall

Chicken or egg, which came first?

The same question could be asked of the rare earth metals market.

Rare earth metal prices have been falling steadily for the last couple of years, in spite of China reducing export volumes. Usually a reduction of supply results in a rise in prices, but the falls are indicative of the size of the REE bubble that had formed around the turn of the decade.

Chuin-Weip noted in the WSJ last week that Chinese exports had plummeted 71% in 2012 from 2011; however, this year has seen a remarkable change – exports have been picking up, with April’s figure of 2,196 metric tons almost six times larger by tonnage from a year earlier and a 28% rise from March, according to China customs data quoted in the article.

China exported 6,112 tons of rare earth metals in the first four months of this year, as the authorities approved higher export quotas and demand from China’s principal REE export market picked up. The US, you may think? Nope – Japan.

The country’s industrial base has responded strongly to stimulus measures, including massive money printing and a substantial reduction in the value of the Japanese Yen to post impressive economic growth in the first quarter.

Japan consumes some two-thirds of China’s RE exports and as GDP rose at an annualized rate of 3.5% in the first quarter compared to 1% in the previous six months, the industrial base has taken the opportunity of cheaper REE prices to re-stock.

Nevertheless, global rare earth prices remain weak.

Related article: Rising Costs are Putting Limits on Energy Production

The value of China’s rare earth exports for the first four months of this year came in 63% lower than a year earlier, at $136 million, according to customs figures quoted in the WSJ. But the pace of the price slump is slowing from the 70%-to-80% declines posted earlier in the year; although if they had continued at that rate, some REEs would have been given away.

domestic rare earths prices in China
As this graph shows, in spite of greater exports, the domestic rare earths prices in China continue to fall. Source: MetalMiner IndX

Although this graph only tracks one heavy rare earth and one light rare earth, the trend is similar across the board. After appearing to stabilize for a while in February and March, prices have recently fallen again.

Some analysts are suggesting prices have troughed. Morgan Stanley is reported in Resource Investing News as saying prices could start to come back up following another 12% across-the-board price decline in May. The bank does add a caveat, however; that more supply from Molycorp and Lynas Corporation in the second half of this year could put more downward pressure on prices.

And there lies the great unknown: when China had a near-monopoly on rare earth metals, they could indeed control the price, although not very intricately. As much material was illegally exported as it was legally, making control difficult and, in part, leading to the severe clampdown on illegal mines.

Related article: Niger’s Uranium Facilities Under Assault

But now China’s control over the supply chain is threatened not from within, but from without.

New suppliers like Molycorp and Lynas are already significant-enough producers to influence the price (Molycorp is running at about 7,000 tons per year, compared to China’s current run rate of some 20,000+ tons per year), and with ongoing investment likely to raise this figure, China’s days of having a stranglehold on the market are, if not over, then at least severely limited.

Greater demand from Japan and a recovering US market should, in theory, lift rare earth prices as Morgan Stanley predicts, but there is no evidence of that so far.

A period of better availability and stable prices would certainly benefit consumers, and after the volatility of recent years, would go some way to slowing the demand destruction that resulted from high prices and supply uncertainty in the wake of China’s attempts to control its supply market.

By. Stuart Burns




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play