Thursday, September 27, 2012

Rare Earth Prices To Decline

To defeat counterfeiters: Shining UV light on a Euro
results in green fluorescence from terbium
THOMSON REUTERS (NEW YORK) - Rare earth (RE) prices soared by hundreds of percent in 2011 when China restricted its exports. Hot money entered this illiquid sector but later departed resulting in a crash. One of the REs, lanthanum, used in rechargeable batteries, rocketed 26-fold from USD5.15 per kilogram in January 2010 to a peak of USD140 in June 2011, while the current price is USD20.50. New production from US Molycorp - the biggest RE producer outside China - and Australia's Lynas in Malaysia is likely to further push down prices of "light" rare earths, which are not as scarce as their "heavy" peers. China's slower economic growth will decrease rare earth prices as well, as the country not only produces more than 90 percent of the elements, but it is the most significant consumer of the materials. In August 2012, China raised the yearly export quotas on rare earths by 2.7 percent, which is the first increase in five years. Light REs such as cerium and lanthanum will be hit hardest by the increased supply because they are not rare at all. Nevertheless, the price outlook for heavy REs (e.g. terbium oxide), which are scarcer and expected to see higher demand in applications such as high performance magnets and energy efficient lighting. Source: Rare Earth Prices To Erode On Fresh Supply, China (Reliability: Medium)

Comment:  The group of REs is not an entity. Based on supply and demand that affect prices, it is useful to divide the group into two categories: light and heavy REs.

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