SHANGHAI, Jul. 10 (SMM) - Rare earth prices have fallen to levels during 2010-2011, when China began to restrict rare earth exports. Japan has been cutting rare earth utilization and developing substitutes recently, which caused rare earth prices to fall. Those technologies are expected to be used in rare metals.

China's export prices for major rare earth products have fallen by about 10% in mid-July compared to May. Prices of neodymium used in high performance magnet fell to USD 70/kg, and dysprosium prices dropped to USD 500/kg, about 1/7 of a high in July 2011.

China's rare earth output accounts for about 90% of global total output. Rare earth prices jumped as China curtailed export quotas and due to the Sino-Japan ship incident in 2010, with neodymium and dysprosium prices rising by 10-20 times in 2011.

Japan mainly uses dysprosium to produce motor magnet used in hybrid electric vehicle. But as rare earth prices soar, many products stopped using rare earth. Magnet utilization in each automobile also decreased by 40% from 2011. Honda developed a technology which can save dysprosium utilization by 30% in hybrid electric vehicle in 2012. The technology will be used in new style hybrid electric vehicle to reduce purchasing risk.

Rare earth demand in 2013 was about 107,000 mt, up 7% YoY, but growth has been slowing.

Chinese rare earth cargo holders cut selling prices. China's exports to Japan from January through May 2013 rose by 49%. In order to stabilize rare earth prices, Chinese government eliminate illegal exploration. In response, rare earth prices began to rise in July.