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Hike In Rare Earth Prices As China Quotas Bite

by Anthony King – Chemistry & Industry [1] – Published: September 13, 2010

The price of so-called rare earth metals has ratcheted up in recent weeks. These metals are essential for high-tech goods and green technologies and China is virtually the sole producer.

The price hike was due to two factors, according to Judith Chegwidden, rare earth expert at Roskill Information Services. Primarily, it was the announcement of much tighter export quotas, with China cutting quotas for rare earths in 2010 by 40% from 2009 levels (C & I 2010, 6, 14). Also, there was some recovery in demand. ‘I think it is unlikely that the Chinese will ease export restrictions as they are very clear that they have to conserve resources and implement environmental regulations with greater vigour,’ adds Chegwidden.

However, the most extreme price increases occurred with lower value rare earths like cerium. Prices for cerium oxide had increased from around $8000/t at the end of July 2010 to around $36,000/t in September 2010. For neodymium, the increase was from $37,650/t to $56,750/t over the same period. China did not specify any particular rare earths when it announced the export restrictions, says US analyst Jack Lifton, who thinks the price rises are unjustified. Traders and suppliers do not want to waste their export quota on low value rare earth oxides, so stopped exporting them. ‘I was amazed that somebody then quoted cerium prices at five times the recent price, yet cerium is plentiful,’ says Lifton. ‘This is simply speculative fever.’

At a recent international rare earth conference in Beijing, Lifton was told that 2009’s export quota for rare earths was not used up. He says there is no Chinese conspiracy to corner the market in rare earths. There was not much talk about US company Molycorp in Beijing, except that if its Californian rare earth mine gets into production, Chinese customers may be able to buy its products.

Chegwidden, who also attended the Beijing conference, says the Chinese clearly believe that the rest of the world needs to exploit rare earth resources outside China.