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boom, bust and boom again for rare earths?

by:Newland     2020-02-25
LONDON (Reuters)-
All commodity markets are prone to boom and bust cycles.
However, few people can be as spectacular as they have experienced during the decade.
The price of rare earth elements in the periodic table has increased by more than 2010 Times-
Crash as fast as before 2011.
Lows for the next five yearsscale range-
The rare earth deals have slipped down from the collective investment radar and their positions have been replaced by new \"hot\" metals such as lithium and cobalt.
But now they\'re back.
Or at least a few of them are.
Since the beginning of this year, the price of oxidized nd and oxidized dymium has risen more than 80% again.
As ever, this is all about what is happening in China, which is the main producer of these key materials in the world.
However, this is also a story of a particular supply chain adapting to rapid development
Because these two special rare earths are part of the same green technology revolution, such excitement has been aroused in the field of battery materials, changing the demand.
Spot price diagram of NdPr oxide in China: tmsmrt
Rs/2 glIeoX nd and ase, or more manageable NdPr, are already the two most commonly used rare earth elements (REE)
According to analysts at RFC Ambrian, 36% of global rare earth consumption in 2015 (
\"Alchemist\", November 2016).
They are on the hard drive of your laptop and in the headphones you wear on your way to work.
However, their most important application is the magnet for electric vehicles, which is where they enter the supply chain of electric vehicles.
Like lithium.
Ion batteries, permanent magnets using NdPr in motors are industry standards, which means they are facing similar exponential growth from the global fleet electrified.
RFC Ambrian predicts that NdPr production will increase by 45,170 tons in 2015, \"a total of 15,000 tons will be required (‘low case’)
35,000 tons (‘high case’)by 2020.
Supply must come from China.
Earlier in the decade, it was China that caused the explosion of oil prices and the subsequent collapse.
The country cut off exports of rare earths on the grounds that it needed to control the illegal production of production centers in Inner Mongolia.
The rest of the world, like the World Trade Organization, cried and China was forcedface.
Since then, official exports have grown steadily, 26% in 2015 and 34% in 2016.
Unofficial exports were originally designed to deal with these skies.
High prices, resulting in a surge in supply, keeping rare earth prices on rocks
Until the lowest level this year.
However, with Beijing integrating the rare earth industry into six major groups and launching a war of attrition against unofficial sectors, illegal production appears to have been declining.
This year, official heat has risen further in the form of the same rolling environment and regulatory inspections that hit other Chinese metal industries such as aluminum.
In fact, according to Adamas Intelligence, which focuses on key mineral markets, a clear focus of the most recent inspection was on 180 companies involved in the rare earth industry. (
\"NdPr oxide in China-Panic or Party? ”, August 2017).
It is worth noting that almost all other rare earth prices in China show signs of bottoming out from the depressed price environment in 2012 --
2016, despite the same violence as the NdPr rally.
If Beijing\'s restrictions on the rare earth industry lead to higher prices, Beijing also has a way to limit rare earth prices in the short term.
Sitting on an unknown number of rare earth reserves, it is now under pressure to release some of the rare earth to curb the bubbling spot market.
There is a high
Last month, the China Rare Earth Industry Association, the Strategic Reserve Bureau and the National Development and Reform Commission held a power meeting to discuss the situation.
Active consideration is being given to possible stock offerings to rein in the latest signs of the rare earth boom.
After all, it is in China\'s own interest to contain radical price fluctuations.
This country is in the leading position in the green technology competition.
This could be another hidden factor in the recent surge in NdPr prices.
Like lithium, this is a supply chain that has to adapt to new sources of demand in an extremely fast time.
China\'s magnet producers are increasing their capacity to meet the ambitious electric vehicle targets of global automakers.
And, citing Adamas\'s intelligence, \"Historically, there are very few industries that are conservative and cost-effective-
Concerns and risks in the automotive industry.
\"The result is a growing shift to the long term. term, lock-
According to Adamas, in rare earth supply contracts such as NdPr.
It cites the example of China\'s North Rare Earth Group, China\'s largest NdPr producer, a promised supplier of rare earth magnetic materials in Baotou, Inner Mongolia, which has just added magnet capacity through integration.
As these large Chinese producers and user groups lock in future purchases, the supply of materials in the spot market is decreasing, squeezing the rise in spot prices.
This has had an optimistic impact on future pricing, but it has also caused trouble for global supply chains, especially those that do not have vertical integration.
In addition to China, the only major rare earth producer is Lynas Corp, which operates the Mt Weld mine in Western Australia, with an NdPr output of just over 5,000 tons per year.
However, a large part of this output is aimed at Japanese buyers who are eager to diversify their purchases after the Chinese market is hit.
The Yamaguchi mine in the United States is still being careful and maintained, although it has just been acquired from bankruptcy, and ironically, it was acquired by a consortium built around China\'s Sheng and resource rare earth producers.
Shortage of rare earth supplies outside China is triggering a boom in rare earth, and mines miners are looking for new sources of production around the world.
Several new businesses are in the feasibility study phase, but it remains to be seen whether there is enough business to be put into production.
At present, China has the ability to control out-of-control rare earth prices.
But this year\'s peak is a warning signal that the particular supply chain is still highly unstable.
Rare earths, especially NdPr, are expected to make a comeback. (
The opinion expressed here is the opinion of the columnist of Reuters)
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