Rare earth prices have likely bottomed out and could be poised for a rebound in the second half of 2024 on the back of strong demand by the electric vehicle and wind power sectors, Shanghai Metals Market analyst Yang Jiawen has told Reuters.
Rare earth prices surged to record highs in 2022 before pulling back sharply in 2023 largely due to increased supply from China and slower-than-expected demand growth. For instance, the price of praseodymium oxide, one of the most widely used rare earth elements, in China tumbled 34% in 2023, while terbium oxide and neodymium oxide crashed to their lowest levels since late 2020 last month. However, Jiawen says further downside for rare earths, particularly for neodymium-praseodymium (NdPr) oxide, used in permanent magnets, which fell 38% last year, is limited with prices near the production cost level.
Rare earth elements are a group of 17 metals used in magnets, lasers, defense technologies, including vehicle-mounted systems such as tanks, and military communications, along with various clean energy technologies. They are also used in consumer goods such as computers, televisions, and smartphones,
Guolian Securities has predicted that NdPr oxide is likely to record a 800-metric-ton deficit globally in the current year, flipping from last year’s 6,600-ton surplus.
“We expect extra supply to be more or less cleared by end-2024, as demand catches up with supply through continually increasing electric vehicle sales and wind turbine production,” said analyst Willis Thomas at CRU Group.
Further supporting prices will be slowing quota growth by Beijing.
“We do expect another increase in production quota for both mining and separation … but not to the extent we have seen last year,” analyst Ross Embleton at Wood Mackenzie has said. Last year, China issued three batches of rare earth output quotas, the first time it issued a third set of quotas in a single year in 17 years. The total quota for the year clocked in at a record high of 255,000 tons, good for a 21.4% Y/Y increase. However, China’s quotas are expected to increase by a more modest 10% to 15%, analysts at Baiinfo have predicted in a research note.
China has controlled its supply of rare earths through the quota system since 2006. According to the United States Geological Survey, China accounts for 70% of global rare earth mining and 90% of refined output. Beijing recently banned the export of rare earth extraction and separation technologies in a bid to protect its market dominance and has threatened to cut off supply as relations with the U.S. deteriorate.
Source: Oil Price