The Rare Earths Resurgence: Hope or Hype?

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Rare earths got a spotlight this that’s more often reserved for steel, renewables and other more flashy metals courtesy of CBS News’ “60 Minutes.

Rare-Earths_Chart_April-2015_FNL

Response has been mostly positive and the monthly Rare Earths MMI® registered a value of 29 in April, an increase of 3.6% from 28 in March. More importantly, shares of the only US-based Rare Earths producer, Colo.-based Molycorp, shot up as soon as the report aired.

Hype vs. Hope

Is this a sustainable trend? The trace metals that make up the rare earths group are not any more abundant or in demand than they were a few weeks and we’re still not clear on exactly what China lifting its rare earth export quota system actually even means.

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Why all of the concern, all of a sudden, for yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium? We have documented, several times, that despite China’s market dominance there is not yet a shortage of the elements that are used in everything from cell phones to fighter jets.

My colleague, Lisa Reisman, rightfully pointed out this month that, “the underlying supply and demand fundamentals create absolutely no business case for the private sector to behave any differently. As long as heavy rare earths continue to flow from China (we are talking about the following metals: yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium) at a ‘not break the bank’ price, the private sector remains content with the status quo.”

So, why the price jump and the coinciding jump in Molycorp‘s stock price? It could be entirely chalked up to hype following the somewhat alarmist report on China’s dominance of rare earth production, but that wouldn’t move non-US rare earth prices. The other side of the heavy rare earths equation both Reisman and rare earths consultant Jack Lifton mention is that the demand for light rare earths is non-existent.

Light Rare Earths Non-Demand

“The light rare earths literally are in oversupply. Yes, I’m talking about a supply glut. That has really dampened prices and put America’s sole rare earth mining company, Molycorp seriously in the red,” Reisman wrote.

According to Roskill Information Services, the overall rare earth market will grow by 6% from 2014 to 2020, but this figure masks the overall growth rate for each of the 17 individual rare earths. The highest growth rate is more than 6% annually for those heavy rare earths used to produce magnets, catalysts, and ceramics. The rest, still simply aren’t that desirable.

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Neodymium prices inched up 2.5% to $65,292 per metric ton. Praseodymium oxide rose 2.5% to $66,098 per metric ton. At $838.31, terbium metal finished the month up 2.0% per kilogram.

Samarium oxide prices dropped by 5.6% this month to $2,741 per metric ton. A 3.8% decline for cerium oxide left the price at CNY 12,500 ($2,015) per metric ton. Lanthanum oxide prices fell 3.7% to $2,096 per metric ton. Europium oxide fell a slight 2.7% over the past month to $290.19 per kilogram. The value of dysprosium oxide weakened by 1.1% this month, settling at $286.96 per kilogram.

At a price of $5,643 per metric ton, yttria did not budge the entire month. Rare earth carbonate experienced a flat month, staying around $4,030 per metric ton. The price of terbium oxide held steady around $644.86 per kilogram last month. Last month was consistent for yttrium, which did not move from $43.53 per kilogram. Prices for neodymium oxide remained constant this past month, holding at around $49,976 per metric ton. Hovering around $49,976 per metric ton for the month, praseodymium neodymium oxide remained unchanged.

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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