Rare Earths Price Index Holds as China Quota to Stay, Tax to Hit Industry

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As usual, the rare earth metal and oxide industry in China is driving headlines again this month, but this time for its recently stepped-up environmental compliance moves on exports and a value tax said to be levied soon on producers.

However, nothin’ doin’ on the rare earth metal prices front for the last month on our price index…and perhaps not much activity to come in the 2014 rare earths price forecast, either. (More on that in exclusive commentary from Zachary Schumacher of Asian Metal below…)

MetalMiner’s monthly Rare Earths MMI® registered a value of 31 in June, on par with May’s value:

Compare with last month’s trends – here’s our free May MMI® Report.

Rare-Earths_Chart_June-2014_FNL

Of the movers over this past month, lanthanum oxide is now in a three-month slide, losing another 2.5%. Its partner in crime, cerium oxide, also faltered last month. Many other rare earth price points on our index, including neodymium and neodymium oxide, held flat. (All exact prices for metals and oxides tracked by the MetalMiner IndX below.)

Quotas, Taxes and Tariffs

Zachary Schumacher, rare earths analyst for Asian Metal, told MetalMiner that the Chinese likely won’t impose the value tax anytime soon, since their domestic interests are primary.

“Even if the companies receive some sort of tax break opposite and equal in value to counteract the new tax, it’s simply going to damage Chinese consumers and improve the condition of foreign projects relative to the Chinese mines,” Schumacher said.

“From my sources, the quota does not appear to be getting removed this time around (likely Q1 2015), and so it wouldn’t make sense yet to implement the tax. They could implement it in order to keep prices stable, but it’s unlikely to cause prices to rise (unless greater than the average 20-25% to replace the existing RE tariff) and not a great way to support the domestic sector.”

Strategic Stockpiling?

A recent article in Bloomberg cites yttrium, “used in laser targeting and weapons, and dysprosium, used in magnets for Tomahawk cruise missiles and Predator drones,” as being flagged by the U.S. Department of Defense as a priority in an October report to Congress. Yttrium kept steady last month, and dysprosium oxide fell on the index.

However, due to the supply picture we’ve painted lately, as MetalMiner Editor-at-large Stuart Burns rightly pointed out recently, with an eye towards commercial US buyers:

“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.”

What This Means for Metal Buyers

Consumers should not be hassled into panic-buying by worries of China’s State Resources Bureau buying up all the supply. “My best bet is to wait and to see what happens as of July 1,” said Zach Schumacher. “If the new quota is implemented, most prices will continue to be flat or come off (in the case of lanthanum and cerium), and I can buy with a general confidence in flat pricing. If the Chinese decide to implement a tax, it’s not likely to cause a bump in prices either, so it’s best to hold out.”

We may indeed have hit the bottom of rare earth metals prices…

Complete Prices, Movements: Rare Earths MMI®, June 2014

A 7.3 percent drop over the past month left yttria at $8,158 per metric ton. Lanthanum oxide fell 2.5 percent to $3,119 per metric ton. Dysprosium oxide prices decreased by 2.4 percent this month, ending at $257.55 per kilogram. Last month, cerium oxide prices dropped by 2.4 percent to $3,279 per metric ton. At $639.87 per kilogram, europium oxide was down 1.2 percent for the month.

Hovering around $92,781 per metric ton for the month, praseodymium oxide remained unchanged. The price of terbium oxide held steady around $511.89 per kilogram last month. Rare earth carbonate held pat last month at $3,999 per metric ton. Prices for praseodymium neodymium oxide remained constant this past month, holding at around $51,989 per metric ton. Last month was consistent for neodymium oxide, which did not move from $51,189 per metric ton. Yttrium experienced a flat month, staying around $46.39 per kilogram. At a price of $2,959 per metric ton, samarium oxide did not budge the entire month. Terbium metal traded sideways last month, staying around $735.85 per kilogram. Hovering around $66,386 per metric ton for the month, neodymium remained unchanged.

Compare with last month’s trends – don’t miss our free May MMI® Report.

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.

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