As any good rare earths buyer knows, China produces more than 85% of the global supply of rare earths and the country is also the largest consumer.
What if China was to become a net rare earths importer? A recent report by Adamas Intelligence, a rare metal research firm says that China will, eventually, become just that.
The report reiterates how substitution and replacement have hurt demand over the last six years. It says 30,000 metric tons of annual rare earth oxide demand were lost due end-users’ growing concerns over supply security. On top of that more than 20,000 mt were lost as a result of the ongoing phase out of mature technologies such as fluorescent lamps, some nickel-based batteries, and hard disk drives used in PCs.
This isn’t news to anyone following our Rare Earths MMI. It’s been flat for the last three years and has remained steady at 17 for the seventh straight month.
However, they will eventually recover. According to Adamas, following a lengthy and painful adjustment, the rare earths market will return to strong global demand growth for a number of rare earth elements including neodymium, praseodymium, dysprosium, and lanthanum by 2020. The resulting rise in price will help “sustain the profitability and growth of today’s dominant producers, and incentivize continued investment in exploration and resource development globally”
Rare earths demand will boom from 2020 onwards as growth rates of top end-use categories such as electric vehicles, wind turbines and other high-tech applications accelerate. One of Adamas’ key takeaways is that as China’s insatiable demand for rare earth elements continues to grow over the next decade, China’s domestic production will struggle to keep up in all scenarios, leading the nation to become a net importer of certain rare earths at the expense of the rest of the world’s supply security. In fact, by 2025 China’s domestic demand for neodymium oxide for permanent magnets alone, Adamas believes, will be poised to exceed total global production of neodymium oxide by 9,000 mt.
So, even if the market looks essentially flat for the next nine years, the promise of renewed rare earths demand is still there.
Actual Rare Earths Prices
Chinese dysprosium fell 4% to $174.23 a kilogram this month from $181.56 in December. Chinese neodymium, however, increased 3.4% to $48,956.08 a metric ton from $47,351.99/mt in December.