Rare Earth Metals
Screenshot from The West Australian's coverage.

Screenshot from The West Australian’s coverage.

Recently, Lynas Corporation founder and chairman Nicholas Curtis signaled that he’s fed up with the down-in-the-dumps, low-price rare earth metal market (our cheeky and unfounded speculation) by announcing his departure from the company after 14 years (according to the West Australian’s reporting).

As both Curtis and MetalMiner say goodbye to the REE market of 2014, we thought we’d take the opportunity to recap the year with a Best of Rare Earths selection.

What the Year in Rare Earths Prices Looked Like

Rare-Earths_Chart_December-2014_FNL

In short, not awesome for Western rare earths producers, such as Lynas and Molycorp. For buyers, the deeply discounted REE complex is only made better by the prospect of going even lower; MetalMiner’s Rare Earths MMI® is having a hard time finding a true floor.

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Pickled...like the heavy gauge steel.

Pickled…like the heavy gauge steel.

Ok, so Lynas Corp. and Molycorp aren’t technically in a fight, and steel is not coming in the crunchy form of your grandmother’s classic dills, and Autodesk…well, Autodesk did announce new applications, so we’ve got nothin’ on that front…but the point is that these are the ties that bind the Best of MetalMiner: Thanksgiving 2014 Edition.

It’s definitely that time of year again: to look back at the most-read stories on MetalMiner over the last quarter or so.

FREE Download: The Monthly MMI® Report – The #1 Resource for Buyers.

So back to that “fight” regarding Lynas and Molycorp…

1. Lifton vs Kingsnorth: Don’t Believe Lynas Corp, Molycorp Hype?

Celebrity Deathmatch Copyright: MTV

Celebrity Deathmatch Copyright: MTV

Our most-read story over the past three months focused on the “Celebrity Deathmatch” of sorts we dreamed up within the rare earth metals sector: that between renowned REE analysts Jack Lifton and Dudley Kingsnorth.

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It would seem China is finally getting its house in order regarding rare earth resources, even if it has taken a WTO ruling to help the process along. Contrary to recent press reports, it is fair to say China saw the writing on the wall a year or more back and has been busy trying to tale control of the sector.

As a Chinese publication, the Beijing Review, put it just last week the government has carried out major crackdowns on illegal mining, black market dealing and smuggling activities in the rare earth industry in a move to further the industry’s healthy development for the last year. In Ganzhou, east China’s Jiangxi province—an area rich in light rare earth resources, the journal reports more than 40 officials were probed for their involvement in illegal rare earth mining and processing last year.

Rare-Earths_Chart_August-2014_FNL Read more

Reports on China’s rare earth elements (REE) industry are nearly always alarmist in nature, drawing on the squeeze China put on world supplies a few years ago that led to a spike in prices and the fact the country remains the source for some 90% of supply and 50% of global reserves.

In recent years, though, China’s behavior regarding the rare earths has been relatively benign.

FREE Download: The Monthly MMI® Report – covering the Rare Earths market.

True, Beijing was not above using REE supply to pressure the Japanese a couple years ago when they had a dispute over some small islands, but generally speaking, repeated reference to the fact that China supplies 90% of the world’s rare earth metals and oxides and has reduced export quotas presents a misleading picture of the market being squeezed.

In fact, the market is well supplied and as our monthly Rare Earths price index shows, prices have been drifting off since early Q4 last year in spite of recent announcements that China is going to start stockpiling REEs.

Piling that Rare Earths Stock

The Chinese stockpiling, under the direction of the Ministry of Land and Resources, began with a pilot project almost a year ago in China’s primary mining region of Baotou in Inner Mongolia. At least 10 storage facilities are being built and managed by the world’s largest producer of rare earth metals, government-controlled Baotou Steel Rare-Earth (Group) Hi-Tech Co.

Chinese state media reports say stockpiles may eventually top 100,000 metric tons, while a report from Dow Jones states that over 40,000 tons of storage have been built in just the last few months. A Bloomberg Businessweek report quotes sources that say the State Reserves Bureau (SRB) intends to pay 10% above the market price for its stockpiled REE’s as if this increased demand at higher-than-market prices were a threat to current prices.

While it is not impossible prices could rise this year, the reality is China’s export quota has not been fully utilized for a couple of years now. Reports that exports fell 9.7% are not a result of restricted supply, but of muted demand. Consumers are getting more savvy about switching to non-REE technologies, alternative supplies from Molycorp and Lynas are rising and the speculative interest in REEs has waned after many got their fingers burned in the aftermath of the last spike.

Calls for a US stockpile are not a bad idea in terms of managing supply, but the country is not at strategic risk – it should be remembered only 5% of the US consumption is for military use, 95% is for commercial applications. If it comes to a squeeze, the military will come first and it’s the supply of iPods that may be hindered, not cruise missiles.

China’s SRB is, in practice, more a savvy manager rather than satanic manipulator of market supply, releasing metals into the market to slow price rises and buying when prices are weakest to support local manufacturers. In so doing, they arguably bring stability rather than present a threat, and almost certainly make a profit by buying low and selling high.

What This Means for Metal Buyers

So consumers should not be hassled into panic-buying by worries of the SRB buying up all the supply. In reality, Chinese REE producers are probably struggling to make money and find a home for all the metal they are producing. Follow the Monthly Rare Earths MMI each month to track what impact, if any, the SRB’s purchases have.

Western rare earths producers like Molycorp, for one, will be hoping prices do not drift any lower and may be quietly cheering from the sidelines if the SRB buying stops prices going any lower.

FREE Download: The Monthly MMI® Report – covering the Rare Earths market.

[ismember]After falling 7.7 percent, yttria landed at CNY 60,000 ($9,917) per metric ton and making it the week’s biggest mover on the weekly Rare Earths MMI®. Cerium oxide finished the week at CNY 24,000 ($3,967) per metric ton after falling 4.0 percent. Rare earth carbonate dropped 3.8 percent over the past week to CNY 25,000 ($4,132) per metric ton.

After a 2.6 percent decline, samarium oxide closed out the week at CNY 18,500 ($3,058) per metric ton. Praseodymium oxide prices were off slightly at CNY 575,000 ($95,036) per metric ton, down from CNY 580,000 ($95,855) a week ago. Praseodymium oxide fell 0.9 percent over the past week to CNY 575,000 ($95,036) per metric ton. Dysprosium oxide remained essentially flat from the previous week at CNY 1,750 ($289.24) per kilogram.

Closing at CNY 23,000 ($3,801) per metric ton, lanthanum oxide remained unchanged for the week. Following a steady week, prices for neodymium closed flat at CNY 405,000 ($66,901) per metric ton. Neodymium oxide prices held steady from the previous week at CNY 315,000 ($52,063) per metric ton. At CNY 315,000 ($52,063) per metric ton, the price of praseodymium neodymium oxide did not change since the previous week.

Terbium metal prices held steady from the previous week at CNY 4,900 ($809.87) per kilogram. At CNY 3,400 ($561.95) per kilogram, the price of terbium oxide did not change since the previous week. At CNY 290.00 ($47.93) per kilogram, the week finished with no movement for yttrium.

The Rare Earths MMI® collects and weights 14 global rare earth metal price points to provide a unique view into rare earth metal price trends. For more information on the Rare Earths MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.[/ismember]

Rare-Earths-metals-price-index-metalminer-january-2014

The monthly Rare Earths MMI® registered a value of 34 in January, a decrease of 10.5 percent from 38 in December.

As further indication that Beijing’s campaign to reign in the Wild West that was the Chinese rare earths market in the last decade, China’s biggest producer of rare earths, the Inner Mongolia Baotou Steel Rare-Earth Group, has recently acquired nine regional mining companies as part of a government master plan to consolidate the sector.

Since 2010, it has tried to improve industry regulation, imposing tough new production and export quotas, raising environmental standards and cracking down on smuggling, once the source of nearly a third of the rare earths flowing to international markets. Arguably it was the flow of illegally produced rare earths onto the world market that decimated Western producers in the 1990s and 2000s, rather than a concerted plot by Beijing to take over the rare earth market.

Since 2010, Beijing has sought to consolidate both refining and mining under the control of a small number of state-owned producers. As a result, prices have risen steadily this year as illegal exports have been curbed and legal export prices have been raised. Nevertheless, export quotas are far from being fully utilized as global markets have reduced their dependence on rare earth metals and sectors like renewables and electric autos have failed to hit earlier volume expectations.

The domestic Chinese renewable energy market has conversely been strong with ongoing investment projects in wind turbines and solar energy creating competition for rare earths against export markets.

What This Means for Metal Buyers

While good news for producers such as Molycorp and their Mountain Pass mine, rising prices last year were not such good news for consumers based outside of China, such as the North American and European renewables sectors which have generally seen RE prices rise during 2013. A recent dip in MetalMiner’s latest price index may be the first indication of a supply surplus in 2014.

Key Price Drivers

At $10,743 per metric ton, yttria was down 18.7 percent for the month. Dysprosium oxide prices fell 18.6 percent to $289.24 per kilogram. A 18.1 percent decline for terbium oxide left the price at CNY 3,400 ($561.95) per kilogram. The price of lanthanum oxide fell 17.9 percent to $3,801 per metric ton. The price of samarium oxide closed the month at $3,140 per metric ton after dropping 17.4 percent. Following a 12.5 percent decline in price, praseodymium neodymium oxide finished the month at $52,063 per metric ton. Cerium oxide prices dropped by 12.3 percent this month to $4,132 per metric ton. A 11.3 percent drop over the past month left neodymium oxide at $52,063 per metric ton. After falling 10.0 percent, neodymium finished the month at $66,938 per metric ton. A 8.2 percent drop over the past month left europium oxide at $743.76 per kilogram. Rare earth carbonate prices dropped by 5.5 percent this month to $4,297 per metric ton.

Yttrium prices rose 3.6 percent to $47.93 per kilogram. Praseodymium oxide prices inched up 1.8 percent to $95,862 per metric ton.

At a price of $809.87 per kilogram, terbium metal did not budge the entire month.

The Rare Earths MMI® collects and weights 14 global rare earth metal price points to provide a unique view into rare earth metal price trends over a 30-day period. For more information on the Rare Earths MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

[ismember]The week’s biggest mover on the weekly Rare Earths MMI® was neodymium, which saw a 3.6 percent decline to CNY 405,000 ($66,938) per metric ton. The price of europium oxide declined 2.2 percent over the past week, settling at CNY 4,500 ($743.70) per kilogram. Prices for cerium oxide remained constant, closing the week at CNY 25,000 ($4,132) per metric ton.

Following a steady week, prices for dysprosium oxide closed flat at CNY 1,750 ($289.22) per kilogram. At CNY 23,000 ($3,801) per metric ton, the price of lanthanum oxide did not change since the previous week. Lanthanum oxide traded sideways last week, hovering around CNY 23,000 ($3,801) per metric ton. Neodymium oxide prices held steady from the previous week at CNY 315,000 ($52,059) per metric ton.

At CNY 580,000 ($95,855) per metric ton, the week finished with no movement for praseodymium oxide. At CNY 26,000 ($4,297) per metric ton, the price of rare earth carbonate did not change since the previous week. Prices for samarium oxide remained constant, closing the week at CNY 19,000 ($3,140) per metric ton. At CNY 4,900 ($809.81) per kilogram, the week finished with no movement for terbium metal.

Terbium oxide prices held steady from the previous week at CNY 3,400 ($561.91) per kilogram. Following a steady week, prices for yttria closed flat at CNY 65,000 ($10,742) per metric ton. Closing at CNY 290.00 ($47.93) per kilogram, yttrium remained unchanged for the week.

The Rare Earths MMI® collects and weights 14 global rare earth metal price points to provide a unique view into rare earth metal price trends. For more information on the Rare Earths MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.[/ismember]

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