Molycorp, Lynas Behind, China Leads, But In Rare Earths Forecasting, Ends Not the Means

by on
Rare-Earths_Chart_December-2013_FNL

MetalMiner’s monthly Rare Earths MMI® registered a value of 38 in December, on par with November’s value.

I’ve never been one to dismiss the means over the ends, particularly in rare earth metal circles. What I have noticed involves this: I see plenty of agreement on so many aspects of rare earth metals markets, but the ends never seem to support the assertions. In other words, forget about the means – somebody try and explain the ends!

We all agree on many aspects of rare earth metals markets. For example, most of us know and agree that China not only possesses many of the rare earth minerals and ores, but has become the world’s most capable processor of those ores (several folks previously interviewed by MetalMiner got mentioned in this Wall Street Journal article, such as Gareth Hatch of Technology Metals Research – Gareth’s firm publishes the most comprehensive list of rare earth metal and other minor metal mining projects – as well as renowned expert Dudley Kingsnorth).

We all agree that China has a stranglehold on many of the “heavies” (e.g. those rare earths not mined by Molycorp or Lynas, the two dominant non-Chinese producers that, to respective extents, still depend on China).

Many of us agree and the studies and analyses continue to tell us that few, if any, substitutes exist for many of these metals (some of these non-substitutes include precious metals and other minor metals).

When one considers the importance of a) supply security, b) the lack of suitable substitutes, and c) the fact that one country has a greater than 80% global market share – one might conclude that these factors ought to support rare earth metal prices.

But alas, we don’t all agree on the ends. Read on for a pricing outlook…

Take, for example, this recent analysis in which (again) we can all agree on nearly all of the arguments, but we can’t quite get our head around the conclusion – that prices will rebound.

Zachary Schumacher, rare earths analyst for Asian Metal, tells us that downstream demand has been quiet, and that lutetium, scandium, and praseodymium especially have remained flat in price due to a market consolidation from supply side issues. “The Chinese have shifted the focus for praseodymium oxide towards the production of praseodymium-neodymium oxide, and the remainder has been bought up in China before reaching the US, while lutetium and scandium have been the target of potential stockpiling in China,” he told MetalMiner in an email.

What This Means for Rare Earths Buyers

According to Schumacher, “prices for some materials are likely to slowly bottom out, though (two key light REs) lanthanum and cerium see less likelihood of bouncing back actively. Buyers should pay attention to which materials the State Reserve Bureau/Chinese government targets for a buy up; any potential buy up would include key/critical heavy materials, but the likelihood of this occurring remains unclear as of yet.

“By and large, the spot market should bounce back a bit with consumers returning, so some prices like praseodymium and dysprosium oxide should be firm through Q1,” Schumacher said.

That remains to be seen. On the MetalMiner IndX℠, we have seen some upward price movement for a few of the heavies as reported earlier, but less so for some of the lighter rare earths.

Key Price Drivers of This Month’s Rare Earths Index

Neodymium oxide shifted up 2.9 percent last month, while praseodymium neodymium oxide rose 1.4 percent.

* Get the complete prices every day on the MetalMiner IndX℠

However, the majority of prices we track, including yttrium, praseodymium oxide, dysprosium oxide, neodymium, europium oxide and lanthanum oxide experienced a flat month.

Don’t forget to read November 2013 MMI analysis before December’s full report comes out next 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 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.