Articles in Category: Minor Metals

Another month has come and gone — now it’s time to take a look back at what’s happened in the world of metals. 

In August, all 10 of our MMIs saw upward movement. That changed the following month, when eight of 10 MMIs fell (albeit several of them fell by small amounts).

For our November MMI (tracking October’s activity), four of the MMIs moved up, five moved down and one held flat (the Automotive MMI).

Hitting some of the high points:

  • It was a big month for stainless steel. The Stainless MMI surged by seven points, hitting 70, up from the October reading of 63.
  • Aluminum also had another strong month, continuing what has been a very strong 2017 for the metal. The Aluminum MMI hit its highest reading, 99, in the history of the MMI series.
  • The doctor was in the house this past month (Dr. Copper, that is). The Copper MMI jumped four points.

You can read about all of the aforementioned — and much more — by downloading the November MMI report below.

The Rare Earths MMI dropped for the second consecutive month, losing a point to hit 21. The November reading of 21 marks the lowest reading since June, when it also hit 21.

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This basket of metals, dominated by China, featured heavier hitters like yttrium and dysprosium oxide posting price increases.

However, europium oxide, terbium oxide and terbium metal all dropped for the month. The biggest drop of the bunch came from neodymium oxide, which fell 14.1%.

Rising Demand

Rare-earth metals are used in a number of high-tech capacities: smartphone, laptops and electric vehicle (EV) batteries, among other things.

Cobalt, which is drawing increasing demand in the EVs sector, is one of those metals. As our Stuart Burns reported earlier today, the metal is heating up.

“Plug-in vehicle sales grew 20 times faster than the overall market, justifiably causing concern that cobalt supply could be strained by this one market application,” Burns wrote. “Worryingly for cobalt, the fastest-growing market is also the largest.

“Driven by government subsidies, the Chinese market, at some 351,000 units last year, also grew at 84% over 2015. The switch to EV and PHEV cars is part of Beijing’s drive against pollution, so incentives are not likely to be relaxed anytime soon. Growth of this magnitude dwarfs the 13% and 36% growth rates in Europe and the U.S., respectively.”

Growth of the U.S. Market

While it is indeed true that China overwhelmingly dominates the global rare-earths market, the U.S. is working to increase its presence in the global market vis-a-vis rare earths.

According to a Wards Auto report, research at Purdue University could boost U.S. extraction of rare-earth elements (REEs) while also recycling the U.S.’s 1.5 billion tons of accumulated coal ash.

“REEs have many important applications in things such as permanent magnets in power generation and electric cars, batteries, petroleum refining catalysts, phosphors in color televisions, and many electronics including cellphones,” said Linda Wang, inventor of the technology and Purdue’s Maxine Spencer Nichols Professor of Chemical Engineering, in a Purdue University release. “The demand for REEs is predicted to grow dramatically over the next several decades. REEs used in the U.S. are primarily imported from China, which controls over 90 percent of the supply, with wide implications on the U.S. economy and national security.”

Wang underscored the importance of developing the domestic market as a means of weathering the volatile rare-earths market.

“For example, after China reduced the export quotas in 2010, the costs of rare earth magnets for one wind turbine increased from $80,000 to $500,000,” she added. “After China relaxed the export restrictions 18 months later, the prices returned to lower levels than in 2010. It’s highly desirable to develop the capacity to produce REEs in the U.S. and to become independent of foreign suppliers.”

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Actual Metal Prices and Trends

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The Rare Earths MMI inched one point higher, reaching 22 points in July. This sub-index increased almost 5% from the previous reading.

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Rare earth prices have continued their uptrend that began in March.

Samarium oxide rose by 8.5%, while terbium oxide increased by 5.9%. Meanwhile, the dysprosium oxide price continued to fall slightly, posting a price drop for the second straight month. 

What’s Going On in the Background?

China currently produces around 85% of rare earth metals. Supply is, therefore, restricted to Chinese production and environmental policies.

With growing demand due to the investment in renewable sectors, such as electric cars and wind turbines, investment in rare-earth metal production remains critical.  

South Africa could play a strategic role in rare-earth metals supply.  The Steenkampskraal mine claims to have the highest grades of rare-earth elements in the world. Moreover, the mine had previously been in operation between 1952-1963, according to its website, and appears to be putting in place all of the equipment and permits needed to bring the mine to production. Rising prices will help. Nevertheless, China remains the global price setter for rare earths. 

In addition to South African rare-earth production, Canada’s Mkango Resources confirmed its  plans to start mining from its Songwe Hill mine in Malawi within three years.

By 2021, the mine will produce about 3,000 tons per year of rare earths. The mine will produce  1,000 tons of praseodymium, neodymium, dysprosium and terbium, according to a recent Reuters article.

The Mountain Pass mine, located in California, is struggling to reopen due to a long-running fight between distressed debt investors. Since Molycorp filed for bankruptcy, due to spending on an experimental ore-processing system, its mine has been caught between the feuding creditors.

The court process remains in its early stages— depending on the outcome, Molycorp could lose its rights to run this mine.

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What This Means for Industrial Buyers

Rare-earth metals seems to show signs of a bullish narrative. However, dysprosium oxide finished June weaker than it finished May, which potentially points to a good opportunity to buy.

Actual Rare Earth Metals Prices and Trends

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Here’s What Happened

  • Our Rare Earths MMI, tracking 14 rare earth metal and mineral prices, ticked up to 21 for the June 1 reading, a whopping 10.5% increase from May.
  • We write “whopping” mainly because the Rare Earths MMI has held below the value threshold of 20 since August 2015 — a full 22 months ago. As we wrote last month, that’s when the stock market had its worst month in 5 years.
  • Rare earths prices on the whole, however, seem to be recovering from their 2016 lows. Terbium oxide, for example, rose 11.8% from May to June. Europium oxide, for its part, spiked up 16.7% in the same period.
  • Meanwhile, the dysprosium oxide price has fallen off slightly month-on-month.

What’s Going On in the Background?

  • “The REE mining process is intensive and requires highly toxic processing, which reduces competitiveness,” according to this article. “Because of lighter restrictions on mining and—especially—processing, China remains the world’s top supplier of rare earths.” But a considerable knock-on effect on rare earths prices could be the environmental pollution curbs that China has been (at least publicly) committing itself to as a developing economy. The environmental pressure has likely filtered down to the rare earths processing industry, constricting output enough to squeeze prices upward.
  • Outside China, these exact environmental worries have hamstrung any viable production models (or at the very least, profitable ones) — and Exhibit A is the Molycorp/Mountain Pass debacle. The Mountain Pass mine in California, which used to the the Western Hemisphere’s best bet to unburden its markets from reliance on Chinese REEs, is now being buffeted about by investors battling for the scraps.

What Metal Buyers Should Look Out For

  • While we’re by no means at a market top for the rare earths sector, keep a close eye on “hot” REEs such as dysprosium, as we mentioned last month. New ventures that are getting folks’ attention, such as this one in Australia, are creating a lot of bullish narratives. As we mentioned before, however, in the short term, dysprosium does not look as strong as some of the other constituent metals and minerals, dropping in price between May 1 to June 1.

Key Price Movers and Shakers

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Here’s What Happened

  • The Rare Earths MMI held steady for the month of May at a value of 19.
  • That makes two straight months at 19 for this sub-index, which has slowly crept up over the past quarter and now stands at its highest since August 2015 — back when the Dow had its worst month in 5 years.
  • Several Chinese rare earths price points fell over the month, with increases from neodymium oxide, europium oxide and dysprosium oxide doing their part to keep the ship steady overall.

What’s Going On in the Background?

  • When was the last time you heard the term “stalking horse bidder?” Turns out someone loved Molycorp and its Mountain Pass mine in California, the only source of rare earths production in this hemisphere, enough to buy it. As MetalMiner reported, ERP Strategic Minerals, LLC, part of the ERP Group of companies, has agreed to purchase the salient assets and surface property rights.
  • As leading REE analyst Jack Lifton commented on our story, it would essentially be cheaper to build a new plant in Tanzania rather than reboot existing operations at Mountain Pass. (Check out the story and the comment thread here.)
  • As for rare earths end-use markets, the clean energy and other high-tech applications that rely on REEs aren’t going anywhere anytime soon.

What Metal Buyers Should Look Out For

  • According to this InvestorIntel article, buyers may need to keep a closer eye on dysprosium, used in high-tech industrial magnets, since Northern Minerals Ltd is well on its way to starting the largest dysprosium production operation outside China.

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Here’s What Happened

  • The Renewables MMI spiked upwards for the month of May (but not a terribly huge spike in the scheme of things; see the bullet below), ending at a value of 71.
  • * Editor’s note: We’ve recalibrated the index to better take into account cobalt price fluctuations, hence the spike from 54 in April to 71 in May.
  • However, the Big Heavy of our sub-index that tracks metals and materials going into the renewable energy industry is the U.S. steel plate price. That price point took a 4.8% dive.

What’s Going On in the Background?

  • Several stories from the solar sector have been making waves lately. “Growth has slowed in the rooftop solar industry in the past year,” writes Jessica Goodheart in this piece, “but many see the evolution of battery storage technology and vehicle electrification as promising for the long-term health of the residential solar industry.”
  • And the policy picture? “Industry leaders have been cautiously optimistic that Republicans will leave be the federal Solar Investment Tax Credit (ITC), a major policy driver of rooftop solar, in spite of Trump’s efforts to roll back the Clean Power Plan,” Goodheart notes.

What Metal Buyers Should Look Out For

  • Keep an eye out on steel plate’s raw material inputs — iron ore prices surged in April, as we reported in our May Monthly Buying Outlook, while coking coal prices swelled due to supply disruptions in Australia.

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Few metals have as controversial a supply side as tin. Cobalt also springs to mind, largely due to the relative importance of the Democratic Republic of Congo as a supply source. But tin likewise seems to come from areas prone to military unrest, where illegal mining of the ore provides an opportunity to fund said unrest. Even in established producing countries like Indonesia, supply is hampered by extensive illegal mining, and the authorities have been engaged in a long running struggle to control illegal mining, principally to avoid environmental damage that occurs at unregulated mines.

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Tin has benefitted from a broader commodity rebound this year. Prices are rising and LME inventory is falling as demand from the electronics industry, particularly in China, remains solid. However, one of the key supply-side variables is Myanmar, China’s new source of supply. As the graph below from Thomson Reuters shows, Myanmar is the only significant global source that has been on the rise in recent years. All others by and large have remained static or fallen.

Source: Thomson Reuters

Indonesia has the potential to export more concentrate. Its drive to control illegal mining and encourage greater domestic value-added refining has limited export volumes in recent years, encouraging China to increase imports from neighbouring Myanmar.

Reuters reports that almost all Chinese tin ore and concentrate imports now come from Myanmar, following the 2013 discovery of high grade reserves at Man Maw in northeast Myanmar. Annual production is now estimated at about 33,000 tons of tin concentrate, which Reuters reports is more than 10% of the metal’s global output. Read more

ERP Strategic Minerals, LLC, part of the ERP Group of companies, has been selected as the stalking horse bidder by the Chapter 11 trustee for Molycorp Minerals, LLC and related entities and entered into an asset purchase agreement with Molycorp’s bankruptcy trustee to purchase substantially all the assets and the surface property rights of the company’s debtors at the  Mountain Pass Rare Earths mine in California.

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The offering price is $1.2 million, a far cry from the $40 million offered and abruptly withdrawn earlier this year by Russian-born investor Vladimir Iorich and his Pala Invesments firm. However, ERP, as part of its offer, is also promising to shoulder up to $100 million worth of Mountain Pass’ debts and liabilities. Read more

India’s renewable energy sector just got bigger thanks to an investment from U.K.-owned CDC Group  of up to $100 million to support renewable energy projects.

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The announcement was made by the U.K.’s Secretary of State for Business, Energy and Industry Strategy Greg Clark at the inaugural India-U.K. Energy for Growth Dialogue in New Delhi on April 6. He also met with India’s Minister for Power, New & Renewable Energy, Coal and Mines, Piyush Goyal, to talk about large-scale, private sector investments between the two countries in the area of energy.

The two ministers agreed that on the power and renewables front, the focus will be on the introduction of performance-improving smart technologies, energy efficiency and accelerating the deployment of renewable energy.

For some time now, CDC Group Plc, the U.K. government’s development finance institution, has made its known that it seeks to set up its own renewable energy platform focused on the eastern part of India, and even neighboring countries such as Bangladesh.

The finance institution is contemplating leveraging its experience in running Globeleq Africa, a company in which it acquired a majority stake in 2015, for green energy investments in Asia. Globeleq has a 1,200-megawatt gren power generation capacity spread across Côte d’Ivoire, Cameroon, Kenya, South Africa and Tanzania.

As reported by MetalMiner, India aims to generate over half of its electricity through renewable and nuclear energy by 2027. The world’s largest democracy published a draft 10-year national electricity plan in December, which said it aimed to generate 275 gigawatts of renewable energy, and about 85 gw of other non-fossil fuel power such as nuclear energy, by the next decade. This would make up 57% of the country’s total electricity capacity by 2027, more than meeting its commitment to the Paris Agreement of generating 40% of its power through non-fossil fuel means by 2030.

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India has been taking massive forward strides in the renewable energy sector. Already, as per one estimate, it is set to overtake Japan as the world’s third-largest solar power market in 2017.  Taiwanese research firm EnergyTrend predicted that the global solar photovoltaic demand was expected to remain stable at 74 gw in 2017, with the Indian market experiencing sustained growth. The country was expected to add 14% to the global solar photovoltaic demand, the equivalent of the addition of 90 gw over the next five years.

This month, some of our metals reached new heights while others saw their rallies noticeably falter.

Aluminum and Raw Steels are still riding high, while complicated supply stories saw stainless and copper fall. Demand from manufacturers for almost all of the metals we track remains strong.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

17 Of the 18 manufacturing industries tracked by the Institute for Supply Management’s index of national factory activity reported growth and no industry reported a contraction last month. Buyers still might want to beware as metal markets are showing more pull-backs than we witnessed in March, despite the overall bullish behavior across the entire industrial metals complex.