In the last months and in particular in the second half of 2017, there has been a strong growth of raw material prices on the rare earth market.

The main cause of this change lies in the Chinese Government’s decision to oppose illegal mining sites. This led to the closure of most of them, which provided roughly one third of the total commodity on the market. At the same time, there is a substantial increase in demand for the Automotive sector, which is growing rapidly in China, especially in the electrical sector. As a result, rare earth prices have grown considerably, as can be seen from the trend in recent months.

At the moment it is not possible to determine when this growth will stop, but the prices continue to increase and it is clear that they will not go back to the level they had at beginning of 2017. Since the cost of raw materials is 50-65% of the total cost of permanent magnets, the new scenario is having a big impact on the entire market. In any case, the smaller number of active mining sites did not cause material availability issues.

To minimize the effects of cost increase, Garnet advises to issue open orders as soon as possible, leaving the goods on our stock, to get a final locked price that will not increase.

Thanks to our partnerships with the main producers, we are constantly monitoring the developments of the situation and we will inform our customers about the market trends.

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