Rare Earth Industry Confronted with Challenges

SHANGHAI, May 24 (SMM) - Enhanced government regulations, M & A, the launch of rare earth quotas, environmental protection policies and market speculations had pushed up rare earth prices, with the rare earth industry becoming the focus of markets. Rare earth enterprises thus earned massive money.

But the rare earth industry has been weakening over the past year, with demand remaining sluggish. "Rare earth prices have dropped back to 2010 levels for now." Said a market player.

Although rare earth exports improved in Q1, but the market player reported even if they export 1,000 mt of rare earth each month, exports will only total 10,000 mt, which is much lower than the 30,000 mt/yr export quotas.

The rare earth industry is resource-intensive, with price trends affected by not only supply and demand but also commodity and macroeconomic situations. Both trading volumes and prices will maintain downward track in the near future.

But rare earth prices will rebound once bottomed out. However, rare earth oversupply will not relieve in the foreseeable future. China's rare earth capacity has reached 320,000 mt/yr for now, much higher than global total demand of 120,000 mt/yr.

Nevertheless, rare earth enterprises are seeking for a new way out, innovating technology and developing high-end rare earth new materials. (Edited by SMM)