Rare-earth metal prices climb as China builds reserves
TOKYO -- International spot prices for rare-earth metals are rising amid moves by China to stockpile those key materials for high-tech consumer electronics and hybrid vehicles.
Neodymium, which is used in high-performance magnets, is selling for around $56 per kilogram -- up 10% from a month ago and the highest since July 2015. Dysprosium prices have climbed 3% from the previous month to $265 per kilogram, while prices of terbium, a phosphor raw material, have increased 11% to around $570 per kilogram.
China, which accounts for over 80% of global production of rare-earth metals, is boosting domestic reserves. Since April, the country's six major suppliers have started building up commercial reserves. Deposited in warehouses designated by Beijing, those commercial reserves give an additional buffer for China to respond to market conditions. For this year, a total of roughly 5,000 tons of nine types of rare-earth metals are expected to be set aside as commercial reserves in three installments.
In addition, Beijing plans to create a separate national reserve by purchasing rare-earth metals from the six major suppliers. The initial scale of this stockpile is estimated at 15,000 tons. The combined 20,000 tons in national and commercial reserves is a significant amount, considering China's total annual output is said to be roughly 100,000 tons.
A crackdown on illegal mining and smuggling is another factor behind rising rare-earth metal prices. A large illegal mining operation in Guangdong Province drew a stiff sentence this spring.
Rare-earth prices soared after a collision between Chinese and Japanese ships off the Senkaku Islands sparked a diplomatic row in fall 2010. But purchases diminished dramatically afterward as buyers pursued technologies to curb use of the metals. Neodymium's recent price is nearly 90% lower than its all-time high in July 2011 despite the recent rebound.
But magnet-related demand is rising, and inquiries are expected to increase for neodymium, which is used in high-performance motors for electric and hybrid vehicles as well as for industrial robots.