MTL Index: Rare Earths. Price increase confirmed.

Are rare earths once again becoming rare ? February saw confirmation of the trend begun at the end of last year - the price of rare earths is going up. In January the price index had already increased by 4.3%. In February we saw an additional rise of  8.3%. This confirmation indicates that the market is indeed on the way to recovery. But demand does not seem to be spread evenly...

Are rare earths once again becoming rare ? February saw confirmation of the trend begun at the end of last year - the price of rare earths is going up. In January the price index had already increased by 4.3%. In February we saw an additional rise of  8.3%. This confirmation indicates that the market is indeed on the way to recovery.

 

But demand does not seem to be spread evenly. According to the Chinese Ministry of Commerce, exports of light rare earths fell sharply, with a plunge of 64% compared to the same period in 2014. So what could be more natural than that the production of rare earths outside China, consisting principally of light rare earths such as lanthanum and cerium, should have sharply increased ? In contrast, industry players literally rushed to snap up medium and heavy rare earths. Now that quotas no longer exist, exports have increased by 324%. However, it should be emphasized that in both cases, the value of exports escalated by 11% for light rare earths, and by 332% for medium and heavy rare earths.  More importantly still, it's not just the market reforms that explain this rise.  

 

International demand takes over

Peking is of course continuing the reforms begun in 2014. In February, the rare earth capital, Baotou, launched yet another campaign against illegal mining, as part of the policy conducted by the central government. But as Jon Hykawy, President and Director of  Stormcrow Capital puts it, the fact that "for the first time since the first quarter of  2011, the price of rare earths used in the magnet sector has seen an increase in the last 3 months, it's an indication that the demand for magnets is showing strong growth outside of China."  A Chinese analyst points in particular to the industrial recovery in the United States as an important factor. Pressure on certain rare earths may even appear rapidly, given the limited size of the market. One Chinese expert mentions that the Chinese production of dysprosium oxide in 2011 did not really reflect consumption in the Chinese magnet sector.

It is perhaps this risk of shortage that explains why the Chinese State Bureau of Material Reserve (SBMR) launched a new round of stock building after the Chinese New Year.  For although external demand is currently enabling the market to recover, China has the firm intention of retaining it's rare earths for its local producers in the long-term. Prudent, the long-standing player in permanent magnets, the Japanese company Hitachi, has just formed a joint-venture with the Chinese magnet producer Beijing Zhong Ke San Huan Hi-Tech.

 

China, the engine driving the development of renewable energies

Big consumers of strategic metals, the renewable energy sector bounced back last year. Global investments rose by 16%, after 2 years of contraction. China in particular has taken top ranking with an investment of $US 90 billion, an increase of 32% compared to 2013. Today Peking is a leader in the wind power market in particular, with the installation of 23 GW in 2014. This is 45% of capacity installed in 2014 according to the Global Wind Energy Council (GWEC). It should be noted that 1 MW of wind power capacity consumes approximately 600 kilos of permanent magnets.  In comparison, investments in Europe have increased by only 1%. China is definitely the centre of gravity for strategic metals.

 

3D printing depends on high-tech metals

Whereas this sector could be worth around $US 8.5 billion by 2020, compared with $US 2.9  billion in 2014, analysts are taking another look at the benefits that related sectors might derive. This is notably the case for the materials sector.  Estimated to be $US 400 million, this market could grow by 20% per annum to reach $US 1 billion and high-tech metals will be particularly involved in this industrial revolution. Firstly, because the sectors which use 3D printing are sectors which traditionally consume high-tech metals, such as the medical, aeronautical and automobile sectors. Next, because printing techniques involving metals are being continually perfected, notably through impression with rare earth-based liquid materials. MTL Index, market leader for these metals in Europe, has clearly understood this and through its investors has created a strategic stock of these metals.

 

A market which is recovering

Although all rare earths have progressed these last few months, some have taken off more rapidly. Terbium for instance has progressed by 47% in the last two months. This increase has been so strong that certain sellers are waiting for the price to continue to rise before selling their production, thus reinforcing the increase.  It's not surprising therefore that dysprosium has also seen an increase of more than 20% in 2015. In all, our index for rare earths has progressed by 8.3% over the month.

 

 

MTL Index

21 rue Ernest Cognacq
92300 Levallois-Perret

Paris
Tel 01 56 76 90 04
www.mtlindex.com

Copyright GlobeNewswire


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: %s via Globenewswire


[HUG#1907600]