Rare Earths Price Development

Rare Earth 2020 August 4

The base of RE prices is the China domestic ex works price in RMB, incl. 13% VAT. So the US$-RMB exchange rate can have an amplifying and an equalising effect on monthly US$ prices.

The production quota for rare earth compounds is set by China’s Ministry of Industry & Information Technology (MIIT) twice a year. In our observation, the base of the ministry’s production quota should be the anticipated supply & demand balance of neodymium-praseodymium oxide.

All other elements prices either benefit or fall victim to the command production quota from Beijing.

Rare earth is not a hyper-active commodity market with ten thousands of daily participants, so it is sufficient look at prices once a month.

Real trends in RE show only over the long term.

You can see the price decline of persistently overproduced La, Ce and Y, persistent shortage of Tb, Dy and Gd (in Gd substantially increased demand as well), the decline in Eu demand, all reflected in their respective prices vis-a-vis 3 ½ years ago.

Since the NdPr supply is regulated by MIIT through the rare earth production quota, one can say that NdPr prices have been permitted to rise 10% over 3 ½ years.

The spike of prices in Q3 2017 was part of the EV hype at that time and almost entirely induced from overseas - and the US$ exchange rate.

On the metals side we can see the recovery of long-depressed margins, after forced closure of RE smelters in China.

Here the graphs per item:

Thanks for reading. Have a great rest of the day!