Of­fi­cials: Let up on rare earths

China Daily (Canada) - - BUSINESS - By MENG FANBIN meng­fan­bin@chi­nadaily.com.cn

In 2011, fast-ris­ing prices forced firms out of sec­tor, trig­ger­ing 5-year slump

China’s reg­u­la­tors are try­ing to cool down the price rally of rare earth, which has seen a sus­tained price in­crease since the be­gin­ning of this year, af­ter five years of down­turn.

The Na­tional Rare Earth Of­fice is­sued a state­ment on Aug 8 to the six largest rare earth groups in China, in­clud­ing Alu­minum Cor­po­ra­tion of China Ltd and China North Rare Earth (Group) Hi-tech Co Ltd, ask­ing them to help sta­bi­lize the rare earth mar­ket, ac­cord­ing to in­dus­try in­sid­ers.

The state­ment asks the six groups to pro­mote healthy de­vel­op­ment of the rare earth mar­ket, by strength­en­ing in­dus­try self-dis­ci­pline, main­tain­ing pro­duc­tion and op­er­a­tional or­der and strictly fol­low­ing the pro­duc­tion con­trol plan.

Part of the rea­son for the rapid rise in prices since June has been a lack of co-or­di­na­tion in price sett­tings and the stock­ing up of sup­plies in the rare earth mar­ket.

These moves have di­rectly caused the soaring price, said Xu Ruoxu, an an­a­lyst from Shen­wan Hongyuan Se­cu­ri­ties, adding that the rea­son­able rise of the rare earth prod­ucts since ear­lier this year at­tracted the at­ten­tion of spec­u­la­tors, in­clud­ing traders and man­u­fac­tures.

“Pur­su­ing high prof­its, they be­gan to slow down the out­put rhythm and stock­pile prod­ucts in June. The rare earth prices have seen mod­est gains of about 15 per­cent from Jan­uary to May, due to China’s econ­omy re­cov­ery,” Xu said.

An­other rea­son for the ris­ing

price from Jan­uary to May is that China has elim­i­nated ca­pac­ity by clos­ing many il­le­gal fac­to­ries, said Zhan Sheng, a non­fer­rous me­tals ex­pert from JZ In­vest­ment.

The state­ment asks the six rare earth groups not to take the lead in rais­ing prices, but it may still be hard to hold down the ris­ing ten­dency, Zhan added.

The rare earth prices were still on the rise on Wed­nes­day with av­er­age price of praseodymium-neodymium ox­ide, the iconic rare earth prod­uct, at 435,000 yuan ($65,102) per met­ric ton, com­pared with 385,000 yuan on Tues­day.

Sta­tis­tics show that the av­er­age price of praseodymium-neodymium ox­ide has in­creased 54 per­cent in 2017, and the price has risen more than 36 per­cent in the past two months.

At the same time, the list­ing prices of the six largest groups have also gone up in con­junc­tion with the con­tin­ued price rise of rare earth.

The monthly list­ing price of praseodymium-neodymium ox­ide from the China North Rare Earth is 420,000 yuan per ton in Au­gust, an in­crease of 53 per­cent from April’s 293,000 yuan per ton and a surge of 27.3 per­cent mon­thon-month.

The surg­ing prices of rare earth prod­ucts may harm the whole in­dus­try by squeez­ing down­stream firms, Xu said.

In 2011, surg­ing prices forced many small down­stream com­pa­nies out of the sec­tor and led to a slump in the en­tire in­dus­try for more than five years.

Yuan Hui con­trib­uted to this story.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.