Our Rare Earths MMI was flat for a fourth straight month as the market remains oversupplied and stale ever since China lifted quotas on the magnetic and energy storage metals, the end of a long-running World Trade Organization dispute.
That happened in January 2015 and rare earths have not moved much since. The elements are still highly important for defense, power and green energy applications but prices show no signs of jumping due to Chinese export embargoes or, really, anything else.
This has caused a somewhat dangerous lack of urgency about fixing domestic supply problems as there’s currently no real urgency to create another U.S. supplier like Molycorp. U.S. Rare Earths Inc. looks like the only viable option for the foreseeable future.
This is by design, too, as China is still consolidating its rare earths industry and will likely drive prices even lower during that process.
What Does Consolidation Mean?
A report from BMI Research says the Chinese government will continue to ramp up exports even as it consolidates companies and shuts down some mines. Better management allowing better production at underperforming operations is what Beijing envisions.
Dysprosium and cerium have seen prices fall from $65,865 a metric and $883 per mt, respectively in May 2015, to $37,524 per mt and $685 per mt by September, according to BMI. If you’re not already a member, join MetalMiner membership to see how closely that mirrors or MetalMiner IndX values. See below for those of you in the know.
BMI expects that, in a bid to regain pricing power, the Chinese government will pursue a strategy of consolidating the country’s domestic rare earths sector and increasing exports over the coming quarters. That means even lower prices than what we’ve seen over the last two years.
BMI believes that Australia, Russia, Greenland and the U.S. (U.S. Rare Earths) hold significant rare earths output growth potential over the long term. The analysts from BMI do not expect that these countries will be able to overtake China’s market share any time soon due to the low-price environment.
Actual Rare Earths Prices
Chinese cerium oxide increased to $1,461.08 per metric ton this month from $1,452.89 last month, an increase of .6%. Dysprosium oxide decreased to $183.76 per kilogram this month, down from $184.17 a kg in September, a drop of .2%. Chinese neodymium increased to $48,049.98 per mt this month, up from $47,913.87 in September, an increase of .3%.