China rare earth prices spike on magnet demand, export control fears

China Rare Earth Holdings

26/11/2020 20:25

* Terbium oxide prices power to 8-yr high; PrNd oxide at
3-yr peak
    * China's new export control law comes into force on Dec. 1
    * Magnet buyers may be stocking up in case of any impact
-analyst

    By Tom Daly
    Nov 26 (Reuters) - Prices of rare earth magnet raw materials
have surged in China this week as analysts say a recovery in
coronavirus-hit demand overseas and concerns over potential
export controls have led to increased buying.
    China is the world's top producer of rare earth magnets,
used in everything from wind turbines to military equipment.
    One of the three key magnet raw materials, terbium oxide
 AM-CN-TBOXD , rose to 6,130 yuan ($932) per kg on Thursday, the
highest since June 2012, and is up 26% so far this month. 
    Praseodymium-neodymium (PrNd) oxide  AM-CN-PRNXD  touched a
three-year peak on Wednesday and dysprosium oxide  AM-CN-DYOXD 
on Thursday hit its highest since June. 
    The spike was due to strong magnet demand and the looming
introduction on Dec. 1 of China's potential export controls on
critical minerals, Dylan Kelly, an analyst at Sydney-based
brokerage Ord Minnett, said in a note to clients.
    The export-control law, passed last month, allows Beijing to
prohibit or restrict shipments of some items to countries that
threaten its interests.  urn:newsml:reuters.com:*:nL4N2H902A
    "This a response by China to prevent supply of certain
materials to corporations such as Lockheed Martin  LMT.N ,"
Kelly wrote, referring to the U.S. defence contractor that
angered Beijing by selling missiles to China-claimed Taiwan.
 urn:newsml:reuters.com:*:nB9N2E004F
    Ryan Castilloux, managing director of consultancy Adamas
Intelligence, said prices were being driven by a tight market
balance, noting that Chinese magnet producers only tend to keep
at most one month's inventory. 
    "If there's a big change in demand, they are generally not
equipped to handle that," he said, adding that consumption
outside China had rebounded "sooner and stronger" than expected,
leading to a rapid drawdown on stocks. 
    "Political jousting" between China and the United States and
the upcoming export law are another factor, Castilloux said,
with buyers possibly stocking up in case they are affected.
    China's rare earth magnet exports to the United States
topped 480 tonnes in September, Chinese customs data show, the
highest monthly total since at least 2016.
  
($1 = 6.5741 Chinese yuan renminbi)

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Magnet force    https://tmsnrt.rs/3la3ZYr
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 (Reporting by Tom Daly; additional reporting by Melanie Burton
in Melbourne; Editing by Aurora Ellis)
 ((tom.daly@thomsonreuters.com; +86 10 5669 2119;))