China's rare earth exports soared in February. According to China Customs, China exported 1,106 mt of rare earth in February, up 289.12% YoY. Market players believe that does not mean overseas demand improves.

After rare earth prices climbed to a high in August 2011, China's rare earth exports had been falling for several consecutive months. China's rare earth exports in 2012 were below 2011 levels, and nearly half of export quotas was vacant. Rare earth exports account for 1/3 of domestic rare earth output, and shrinking overseas demand will negatively affect the rare earth market. But rare earth exports tripled in February after rare earth prices rose to early 2011 levels. Is that because overseas demand improves?

But Gao Yuxin, a rare earth analyst from Ruidow, reported demand for rare earth was still sluggish, and transactions were muted.

                  

Shanghai Heli Rare Earth Material Company engages in rare earth import and export business. According to Manager Yuan, the export data does not mean real demand grows, and rare earth international trade is still sluggish. Most China's rare earth exports were made to Japan. According to a professor from Hirosaki University, Japan reduced rare earth imports two years ago due to high prices, and produced with raw material inventories. There were also large amounts of rare earth smuggled into Japan, with prices very low, which is excluded in regular statistics.

Domestic market was also sluggish. Some rare earth users now began to purchase rare earth but modestly with existing prices.

Demand for rare earth was sluggish due mainly to China's weak rare earth downstream user industries. Half of rare earth is used in new materials, while only Zhongke Sanhuan, Advanced Technology & Materials Company and Ningbo Yunsheng produce rare earth permanent magnetic product. Many China's rare earth permanent magnetic product producers posted losses in 2012. Once overseas market weakened, rare earth industry will be impacted.

Demand for rare earth is now extremely weak. One rare earth trader said they only hope rare earth prices do not fall further. Neodymium oxide prices have fallen from RMB 1.4 million/mt in August 2011, to RMB 400,000/mt in March.


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The rare earth case against China launched by the WTO will be decided by the end of the year. Market players believe China will have little chance to win the case, and predict China's management system to the rare earth industry will change, with new rare earth regulations expected to be released.

According to market analyst Chen Jiazuo, China's rare earth industry should put emphasis on local utilization of rare earth and rare earth functional material. He said, rare earth market players generally lack confidence for China to win the WTO rare earth case, and that will cause China to change its management system. Existing management measures including quotas, taxes and qualifications will likely be eliminated, and new regulations will be released.
　　
China will likely accelerate construction of rare earth groups, so that China's rare earth business can run in a way of marketization.


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The Ministry of Land and Resources (MLR) held a press conference titled “Reserves of Petroleum, Natural Gas and Major Solid Mineral Resources in China during 2012” on March 27. According to the press conference, standards on mining recovery rate, mining dilution rate and dressing recovery rate in mineral resources of strategic importance including iron ore, copper ore, lead ore, zinc ore, rare earth and sylvite will be formulated this year.

According to Xu Dachun, Deputy Head of Mineral Resources Reserve Department of MLR, its department will establish databases on comprehensive utilization of mineral resources across China, complete surveys and assessment of mining recovery rate, mining dilution rate and dressing recovery rate of key mineral resources, and release reports on comprehensive utilization of mineral resources on a yearly basis. China’s first resource saving and comprehensive utilization evaluation indicator system will be released, which will be used as standards for evaluation of resource saving.  

China will vigorously popularize advanced and applicable technology so as to facilitate exploitation of mines.

Mr. Xu added that its department will strictly collect mineral resource compensation fees based on mining recovery rate so as to promote rational exploitation of mineral resources.


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In February 2013, China's rare earth exports 1106 tons, greatly increased 289.12% on last year, while in the same time, the rare earth prices have seen a sharp fell comparably. Some experts believe that the significant increase in the exports of rare earth is owing to the low base of last year same period. It is showed from the statistics that rare earth prices in February amounts to $22,650/ton, down 11.32% with last month of $25,540/ton .

Generally speaking, the rare earth companies have filled in its inventory in advance, in order to better prepare its peak selling season in March. It has been informed that, Baotou Steel Rare Earth, which has discontinued its production for four consecutive months, has announced its resume of production, while at the same time, the company has began to use the materials form domestic companies in North China.

GF Securities analyst Guoxian Ju said, With the peak production season in March and April, the rare earth concentrate prices has been stable for almost 2 months. However, the slightly decrease in the price of midstream smelting products has showed the demand is still under depression.


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