Rare Earths MMI Stagnant, Substitution And Recycling Decimate Prices
MetalMiner | Aug 05, 2016 05:03AM ET
Our Rare Earths MMI held steady, or flat, depending on how you look at it, at 17 this month, an example of how stagnant prices have been in a low range this year.
The low price of rare earths did not come about because of export quotas being struck down in China or the World Trade Organization loss that precipitated the quotas’ end. In China, heavy rare earths production became more stable, but that wasn’t the reason either. What has caused the rare earths market to essentially collapse is substitution on a large scale and better recycling of the high-tech minerals.
Rare earths demand has fallen because manufacturers sought to eliminate the threat of a national blockade, the likes of which Japan felt after Chinese rare earths producers essentially blacklisted the country in 2011.
Companies such as Siemens (NS:SIEM), Samsung (KS:005930) and Honda (NYSE:HMC) have accelerated research on how to use less of the minerals, especially the “heavy” rare earths such as lanthanum and dysprosium. In that way, China hurt its own monopoly by forcing their customers to apply more ingenuity and brains to eliminating or limiting the scarce elements in their supply chains. Honda even produced a hybrid car engine, the first ever, that doesn’t rely on heavy rare earths.
Honda’s apparent turning point was a partnership with fellow Japanese firm Daido Stee (T:5471) in 2011, prompted by China’s squeeze. The result today is a new technique for designing crucial engine magnets that avoid heavy rare earths and are 10% cheaper and 8% lighter, Honda told the Wall Street Journal.
The world will still likely need rare earth elements, particularly for renewable energy products such as solar panels and wind turbines, but the evidence of the damage done by China’s attempt to corner the market on heavy rare earths is now overwhelmingly apparent and a recovery in prices will not happen in the short term.
by Jeff Yoders
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.