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EPS100Momentum (73.23)

Spot Price of Rare earth Elements Soar as much as 750% since Jan. 2010



August 31, 2010 – Comments (3) | RELATED TICKERS: MCPIQ , BHP , TECK

Based on data reported by Metal-PagesTM and Asian MetalTM prices for individual rare earth oxide have risen between 22% and 750% since January, 2010, although the most significant rises have occurred since the June announcement on export quota reductions. The largest percentage price increases have been for cerium and lanthanum, which most analysts believe is largely due to China's exporters limiting exports of the low valued light rare earths in favour of the high valued heavy rare earths, creating an artificial (and likely temporary) shortage of these light rare earths outside China. However, there is also increased demand anticipated in the catalyst and battery markets for cerium and lanthanum, the latter linked to growing demand for hybrid and electric cars.

With the exception of terbium, today's prices for all the rare earths are the highest they have been since 2001, when price data became more widely available for individual rare earth elements. Based on a simple, un-weighted, arithmetic average, rare earth prices as a group have risen a remarkable 300% since the beginning of 2010! This has no doubt contributed to the increased trading activity witnessed recently in the shares of rare earth companies such as Avalon.

China's Ministry of Commerce had also indicated that it would implement a range of policies putting the government in control of private and unauthorized mines that produce rare earth elements (especially from the heavy rare earth-rich South China ionic clays), implementing stricter regulations towards improving environmental performance of its mining sector, and requiring foreign companies to move factories to China to complete production of items using rare earths.

The following table illustrates the change in prices for each of the most commonly traded rare element oxides based on data reported by Metal-PagesTM, and Asian MetalTM on an ‘USD FOB ex-China per kilogram' basis. For simplicity, the prices documented are the mid-points between the bid and the ask prices on the reference dates.

Heavy Rare Earths


485 1/5/2010

590 8/5/2010



365 1/5/2010

605 8/5/2010



117.25 1/5/2010

286.50 8/5/2010



10.25 1/5/2010

34.50 8/5/2010



6.75 1/5/2010

40.00 8/5/2010


Light Rare Earths


22.50 1/5/2010

55.25 8/5/2010



21.50 1/5/2010

54.50 8/5/2010



5.60 1/5/2010

33.50 8/5/2010



3.95 1/5/2010

31.80 8/5/2010



4.15 1/5/2010

33.00 8/5/2010


There is general consensus that there will be growing demand for rare earths to enable Clean Technology and tight supplies (especially for the heavy rare earths) until new projects such as Nechalacho come on stream over the next five years. Consequently, significant prices increases are anticipated, although the magnitude of the recent increases has surprised many industry observers. In some cases, individual rare earth prices are already ahead of price forecasts for 2015.

3 Comments – Post Your Own

#1) On August 31, 2010 at 12:32 PM, Melaschasm (69.83) wrote:

requiring foreign companies to move factories to China to complete production of items using rare earths.

This is the heart of the issue, and why we can expect China to stick with the export limits.  A good way to play this might be investment in mining companies that can extract rare earth elements outside of China.

~  There is a risk that China will use this as a negotiating chip to get some other concession.  If you do make an investment play on this, watch the news carefully so you don't end up holding an investment that will plunge in value if China drops the export rules.

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#2) On August 31, 2010 at 12:49 PM, EPS100Momentum (73.23) wrote:

Some rare earth metals are up over 14% today alone.


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#3) On August 31, 2010 at 1:54 PM, Donnernv (< 20) wrote:

Check out LYSDY for a good play on non-China rare earths.

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