ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Commodities

Rare earth prices rise as China tightens spigot on supply

Further boost expected as country cracks down on illegal mining

China produces about 80% of the world's rare earth supplies.

TOKYO -- Rare earth spot prices are on the rise as China, the top producer and exporter of the metals, moves to crack down on illegal mining and enforce environmental rules.

Prices of neodymium, used to make magnets for hybrid vehicle motors, have hit about $65 a ton in mid-July, up 30% from the most recent low in November. This marks the first time the metal price topped the $60 mark in about two years.

Prices of terbium, also used in magnets, reached about $600 a ton, jumping 36% from November.

China, which produces 80% of the world's rare earths, began this year to shut down smelters failing to meet environmental standards such as those for water treatment.

China limits its rare earth mining volume to 105,000 tons a year. But an additional 50,000 to 60,000 tons appear to flow into the market from illegally mined sources. Once the government targets such mines, "there is a high possibility bout 60,000 tons of supply will be lost," says an official at a nonferrous material trading company.

Demand remains strong for rare earth magnets used in motors for industrial robots as well as hybrid and electric vehicles. Japan is the world's second-largest consumer of rare earths, according to the Japan Society of Newer Metals. Domestic demand rose 9% to 16,806 tons in 2016.

And solid demand also is expected for the medium to long term. Electric vehicles require about 50% more rare earth metals than gasoline-powered models. Preparing for a boost in Asia, Shin-Etsu Chemical will invest 5 billion yen ($44.7 million) in a Vietnamese plant it opened in July 2016 to double rare earth magnet output capacity by 2018.

The market heating is "exacerbated by sellers that are withholding supplies in anticipation of higher prices down the road," a magnet maker says.

"Judging from real demand, neodymium prices could rise to about $100," said President Yuji Tanamachi of IRuniverse, a metals market research firm.

(Nikkei)

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media