China Needs to Boost Rare Earths Demand

Despite precipitous falls in several constituent price points – lanthanum oxide, cerium oxide and neodymium among them – the monthly Rare Earths MMI® held steady over the past month for a March reading of 43, on par with February’s value.

This comes after two straight months of declines for the index, and it, along with our Renewables MMI®, shares the dubious distinction of spending its entire existence under the Jan. 2012 baseline of 100. The majority of the price points in the complex held steady over the past month. But nothing has really changed to skew our existing long-term outlook for this minor metals market.

As we reported on last month’s rare earths index, the trouble for downstream demand of rare earth metals, minerals and oxides is far from over. Industry sources report that China demand for rare earths for the balance of 2013 is likely to remain sluggish, mainly because downstream end-use sectors are not holding up their end, according to metal-pages.com.

Certainly not helping the demand situation is more supply coming on stream. Lynas Corp. reported in a Feb. 27 company statement that the company has finally produced rare earths for customers, including a handy dandy flowchart of its process. Of course, it’ll take a bit to scale this operation, but the fundamental reality of future supply increases portend a depressed rare earths market as far as prices may be concerned over the next few years.

“We are watching the rare earth metal price index very closely because we believe a price floor has finally formed,” said Lisa Reisman, managing editor of MetalMiner. “Now whether that means prices will begin ticking up remains to be seen, but we have struggled to see a floor.”

Primary Price Drivers of Rare Earths Index

After remaining essentially unchanged the previous month, the price of lanthanum oxide fell 22.8 percent. The price of cerium oxide dropped 17 percent. Rare earth carbonate prices dropped by 15.4 percent this month.

The price of neodymium fell 6.6 percent. The price of dysprosium oxide fell 2.4 percent over the past month, the second straight month of declines.The prices of yttrium, terbium oxide, yttria, terbium metal and praseodymium neodymium oxide, among others, kept steady over February 2013.


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