Concerns about China’s export restrictions drive up rare- earth prices
Chinese export control law that will take effect starting on December 1 may include rare earth as a retaliatory measure responding to US sanctions over chip supplies targeting Huawei, experts said.
The remarks came as the price of rare earth rose further in November, with neodymium oxide rising 11.56 percent to 511,500 yuan ( US$ 77,900) per ton on Wednesday and praseodymium oxide rising 8.08 percent to 441,500 yuan per ton, with other materials also rising at varying degrees, according to open source data. Among the rising prices, neodymium oxide recorded a marked increase of 37.2 percent so far this month.
Rising rare- earth prices are partially due to the surge of concentrated demand and temporary supply constraints, industry insiders said. With the resumption of work and production in China and the continuous spread of the global pandemic, the demand for rare earth continues to grow.
However, China as the world’s largest rare earth exporting country, rising prices have also driven growing concern by foreign traders that rare- earth supplies may be constrained if it is included in a new export control law that will take effect on December 1.
“Japan, the US and European countries are buying the largest quantity of rare earth from China because they need them for advanced manufacturing, and they are afraid that they will find it harder to import rare earths from China after new regulations are in place,” Zhou Shijian, a former vice president of the China Chamber of Commerce of Metals, Minerals & Chemicals Importers and Exporters, told the Global Times.
Yet Zhou noted that there is no need for Japan and some countries in Europe to worry too much about continuing to purchase Chinese sourced rare earth, as China may use rare earth principally as a “tool of reprisal” in retaliation to the US chip ban targeting Huawei.
“It makes no sense for the US to make chips using Chinese rare earth to make things like chips and then block their sale to Huawei,” said Zhou.