Over the past month, rare earth prices have risen, causing tension and uncertainty among the world’s hi-tech markets. The main cause of this price increase is due to a strong imbalance between supply and demand.
Firstly, in the first half of 2020, rare earth producers did not work at full capacity, leading to magnet producers having relatively low stocks of raw materials, especially in the summer period. Additionally, demand has dropped dramatically due to the growing spread of the covid-19 virus.
In the second half of the year, however, demand from new markets for electronic components such as fuel cells, mobile phones, displays, high-capacity batteries and permanent magnets, unexpectedly increased by about 20%. Suffice it to say, for example, that the demand for permanent magnets for wind power plants and green energy devices has even doubled.
Secondly, contrary to the past, most of the illegal mines in China, which accounted for half the monopoly and influenced listing prices, have been closed and the market is now fully controlled by six government groups. The rules implemented by the Chinese government to reduce the illegal extraction of raw materials have resulted in a slowdown in the growth of the supply of rare earths.
It is assumed that the Chinese export regulations that will be imposed these days have not had a great impact on the current situation. Most market players assume that prices could remain quite high in the first quarter of 2021.
To minimize the effects of cost increases, Garnet recommends placing open orders as soon as possible, placing the goods in our stock, in order to obtain a final locked price that is not affected by the next increases. Thanks to partnerships with leading manufacturers, we are constantly monitoring developments in the situation and are committed to promptly inform our customers about market trends.
Below is the announcement of the quotations of the main raw materials used for the production of rare earth based magnets, indicated in RMB / Ton in the following graphs.
Dysprosium – Iron Alloy:
Praseodynium – Neodymium Alloy:
Cobalt:
