Rare Earth Prices Remains Unsellable

Rare earth prices have remained sluggish recently, with lanthanum and cerium unsellable, causing profitability of rare earth to decrease sharply.

Rare earth prices reversed their increases in August 2011. As demand for magnetic materials improved since early 2013, didymium prices stabilized, and once rebounded in Q1, hovering around RMB 350,000/mt. Gao Yuxin, an analyst of Ruidow, reported that mainstream prices of didymium were between RMB 370,000-375,000/mt last week, with traded prices lower. That is because didymium supply was ample, but purchases were modest due to low prices and decreasing orders and enterprises cutting production.

Neodymium oxide prices once exceeded RMB 1.40 million/mt in 2011.

What even worse is that lanthanum and cerium is unsellable, which is important light rare earth, and will affect overall economic effect of rare earth.

Light rare earth contains many rare metals. Light rare earth consists of 25% didymium, 47% cerium and 25% lanthanum, with cerium and lanthanum accounting for over 72%. Polishing powder and catalyst is major downstream consumer of cerium and lanthanum, while rare earth permanent magnet is downstream consumer of didymium. The sluggish demand for polishing powder and catalyst led to quiet transactions of cerium and lanthanum.

 “We have large amount of stockpiles in the warehouse, and they are unsellable." Said a market player in Baotou.

Demand for heavy rare earth was better, with cerium and lanthanum only accounting for 20%.

The cerium and lanthanum market needs boost from overseas demand and new utilization field to improve.

Major light rare earth producing regions in north China include Baotou, Inner Mongolia, Liangshan, Sichuan, Weishanhu, Shandong and Baiyin, Gansu, with Inner Mongolia Baotou Steel Rare-Earth Hi-Tech taking a leading position. The company's annual report said it will expand M & A with upstream enterprises in Inner Mongolia and Gansu, Sichuan and Shandong.

Some cerium and lanthanum of Inner Mongolia Baotou Steel Rare-Earth Hi-Tech will be bought by the SRB or local governments. Besides, rare earth inventories pressure will not weaken unless illegal exploration decreases.

Baotou Steel Rare-Earth Hi-Tech's Q1 earnings report showed the company earned net profits of RMB 245 million, down 79% YoY. Business income was RMB 2.296 billion, with accounts receivable of RMB 1.662 billion, up 249% from the end of last year.

Nevertheless, low rare earth prices will help raise downstream demand and output.


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