Prices of Chinese Rare Earths Fall

Rare earth minerals have suddenly flooded in the Chinese market, forcing a major plummet in prices, days after the China federal government announced the implementation and issuance of specialized invoices for its rare earth minerals sector.

The surge and huge sell-off of rare earth minerals in the Chinese market triggered prices to sink 100,000 yuan per ton versus the more than 300,000 yuan per ton from official sources, the CapitalVue News said.

China instituted the specialized invoices to control the rare earth minerals sector's output as well as restrain illegal sales and smuggling activities. This has led small Chinese companies in possession of rare earth minerals obtained from unidentified sources to dump their inventory into the market.

Prices of rare earth minerals have increased by as much as fourfold between January and July, while hiking by as much as 1,500 per cent on average in the last year alone.

Because of its high profitability, quite a number of Chinese companies and individuals involved in private mining and extraction rare earth minerals took advantage of the price surge.

Rare earth minerals are comprised of 17 elements. Prized for their magnetism, luminescence and strength, they are widely used in manufacturing of batteries of hybrid vehicles, computers, digital cameras, televisions, smartphones, in long-lasting light bulbs and serving as critical magnets in guided missiles.

However, the trend reversed in July when orders contracted by half from the second quarter, forcing prices to go down. A number of Chinese listed rare earth minerals miners also either discontinued or reduced production.

Figures from the Shanghai Metals Market showed a decline of about 30 per cent in the past three months, with others dropping more than 50 per cent.

Specifically, prices of lanthanum oxide had fallen to 120,000 - 125,000 yuan per ton as of October 24, while cerium oxide, praseodymium, and neodymium prices dived to 130,000 - 145,000 yuan per ton, 1.3 million - 1.35 million yuan per ton and 20 million - 22 million yuan per ton, respectively, according to CapitalVue News.

With the specialized invoices, illegal miners will ultimately be forced to exit the market.

China, the world's second-largest economy is likewise the world's biggest supplier of rare earth minerals, holding more than 30 per cent of total world reserves. Nearly all the world's processing facilities are found in China.