Most Popular
1. Dow Max Drawdown Bear Stock Market 2022 - Accumulating Deviations from the Highs - 21st Feb 22
2.Putin Starts WW3 in Ukraine, Will Use Tactical Nuclear Weapons, China Prepares Taiwan Blitzkrieg - 28th Feb 22
3.World War 3 Phase 1 - Putin WINS Ukraine War! - 25th Feb 22
4.INVESTORS SEDUCED by CNBC and the STOCK CHARTS COMPLETELY MISS the BIG PICTURE! - 10th Feb 22
5.Will There Be A 2024 US Presidential Election? - 3rd Mar 22
6.Gold and SIlver, Precious Metals Sector Is at a Terrific Buy Spot - 6th Feb 22
7.Why Putin Wants the WHOLE of Ukraine - World War 3 Untended Consequences - 6th Feb 22
8.Dow Stock Market Expected Max Drawdown 2022 - 19th Feb 22
9.Stock Market Calm In the Eye of the Inflation Storm - 4th Mar 22
10.M = F - Everything is Waving! Stock Market Forward Guidance - 7th Mar 22
Last 7 days
Cathie Wood Goes All in on Teladoc, ARKK INSANE Noob Investing Strategy! - 17th May 22
This is Anything but Positive for US Housing Market - 17th May 22
What Should We Do If There Is No Fed Monetary Policy Pivot? - 17th May 22
All Possible Ways to Earn Free Litecoin - 17th May 22
How low Could the Amazon Stock Price Fall? - 16th May 22
Cathy Wood ARKK INSANITY There is NO Coming Back! - 16th May 22
NASDAQ 100 Stock Market LOWER LOWS & LOWER HIGH - 16th May 22
Sanctions, trade wars worsen US inflation - 16th May 22
AI Tech Stocks Earnings BloodBath Buying Opportunity - 14th May 22
Futures Contract – Trading Crude Oil With USO - 14th May 22
How to Get Kaspersky Internet Security for 80% Discount! Do not Pay Renewal Price! - 14th May 22
Sagittarius A* Super Massive Black Hole Monster at Centre of Our Galaxy REVEALED! - 14th May 22
UK Public Debt Smoking Inflation Gun - 13th May 22
What Happens When the Stock Market Dip Keeps Dipping? - 13th May 22
Biden Seeks Inflation Scapegoats; Gold Advocate Wins GOP Primary - 13th May 22
Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - 12th May 22
The War on Gold Ensures the Dollar’s Downfall - 12th May 22
Crypto Investors Stable Coins TERROR as Terra USD COLLAPSEs towards ZERO, Tether Next! - 11th May 22
INFLATION IS KILLING SILVER - 11th May 22
The Dominant Investing Theme of the Decade - 11th May 22
Is Bitcoin Headed to Zero? - 11th May 22
RECESSION RISKS 2023 - 10th May 22
The Future of the Dollar Seems So Bright It’s Blinding Gold - 10th May 22
Take Advantage When Markets Succumb to Fear - 10th May 22
How to Recognize a Less\ Than Obvious Opportunity (In focus: Corn) - 10th May 22
How to Ensure Financial Stability for Your Family - 10th May 22
The Stocks Stealth BEAR Market - 9th May 22
A Strengthening US Dollar Is A Double-Edged Sword - 9th May 22
Making Wise Investment Decisions - 9th May 22
Ways to legalize a Moving Company - 9th May 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China’s Rare Earths Squeeze

Commodities / Metals & Mining Sep 02, 2011 - 03:08 AM GMT

By: Anthony_David

Commodities

China’s policy of tightening its rare earth export quota has been causing quite a furor in the rare earth metals market since 2009. With increasing technological advances, the demand for rare earth metals is only increasing worldwide and the declining supply is causing prices to shoot upwards. Prices can come down only if end users reduce production and thereby reduce demand. However, that is an unlikely situation and even if it did happen, the effects are likely to be short lived.


The trend of many end users of rare earth metals moving their manufacturing units to China for easier access to raw materials will change only when western companies begin production. Molycorp is selling rare earth metals left over from earlier mining while Australia’s Lynas Corp opened its Mt. Weld mine on August 4. However, there will be no significant production until 2013 at the earliest. Until then, high prices are here to stay. Little change is expected in Q4 of 2011.

Zhang Di of the China Daily reports, “Rare Earth prices will remain bullish in the second half of this year, but won’t be higher than the first half’s levels, as companies in downstream activities halt production due to expected high operating costs.”

In a recent interview, Molycorp CEO Mark Smith said while global demand continues to be high, “supply outside China continues to be tight, as China continues to reduce its net rare-earth-oxide export quotas. We simply cannot produce enough for our customers.”

A New York Times report states, “For the last two years, China has imposed quotas to limit exports of rare earths to about 30,000 tons a year. Before that, factories outside the country consumed nearly 60,000 tons a year. China has also raised export taxes on rare earths to as much as 25%, on top of value-added taxes of 17%.”

China contributes 97% of the world’s rare earth metals production and Japan is the largest buyer of these metals. Prices have been increasing at such a rate that Japanese buyers are no longer signing six-monthly sales contracts but quarterly ones. They are also earnestly looking for alternative sources of rare earth metals.

Tokyo based analyst Shinya Yamada of Credit Suisse AG said that since May this year, prices have increased by almost three times. Such increases will force companies to avoid manufacturing products that require the 17 rare earth metals. Japanese companies such as magnetic and electronic materials maker Hitachi Metals Ltd., hybrid cars and wind turbines maker Toyota Motor Corporation, and trading houses Sojitz Corporation and Sumitomo Corporation are a few companies that have been hard hit by China’s tightening export policy. The two trading houses import most of Japan’s rare earth requirements.

Fujinori Sato, a deputy manager at Sojitz Corporation said, “China changed its strategy from limiting export quotas to tightening regulations for digging and refining. Prices may go up further later this year.”

Most large-scale users of rare earth metals are developing technologies that will enable them to slowly reduce the use of rare earth metals and still make effective products. Sojitz Corporation has begun investing in rare earth mines in Brazil and Australia while Aichi Steel Corporation plans to begin sourcing its rare earth requirements from South Africa.

By Anthony David

http://www.criticalstrategicmetals.com

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report.

© 2011 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in