Light rare earth prices fell after Beijing increased mining quotas

SHANGHAI, Mar 2 (SMM) – Light rare earth prices in China weakened last week, as downstream consumers held back from making purchases on growing bearishness on future prices after Beijing raised its mining quotas for such materials in the first half of 2020 by more than 10% from a year earlier.

SMM assessed prices of spot praseodymium-neodymium oxide at 279,000-283,000 yuan/mt as of Friday February 28, down about 4,500 yuan/mt from a week earlier.

Prices of neodymium oxide slipped 4,000 yuan/mt to 290,000-295,000 yuan/mt. The decline was smaller as the COVID-19 outbreak affected production at some producers of neodymium oxide.

China set the first batch of mining output quotas for rare earth this year at 66,000 mt, accounting for half of last year’s total of 132,000 mt, according to a circular jointly issued by the Ministry of Natural Resources and Ministry of Industry and Information Technology released on February 19.

Of the total, 56,425 mt was allocated for light rare earths, and 9,575 mt for medium and heavy rare earth metals. This marked an over 10% increase from 50,425 mt for light rare earths in the first batch of quotas for 2019, while those for medium and heavy rare earth metals were unchanged.

Meanwhile, prices of medium-to-heavy rare earths extended their gains on continued tightness in supply. Spot terbium oxide was quoted at 4.13-4.18 million yuan/mt as of February 28, up 0.3 million yuan/mt from a week ago, according to SMM assessments. Offers for dysprosium oxide increased 0.03 million yuan/mt to 1.82-1.85 million yuan/mt.

Prices of terbium metal climbed to 5.12-5.25 million yuan/mt, those of dysprosium-iron rose to 1.8-1.82 million yuan/mt, those of holmium oxide were up to 350,000-355,000 yuan/mt, and those of gadolinium oxide went up to 167,000-172,000 yuan/mt.

Uncertainty around the recovery of rare earth minerals imports from Myanmar and subdued production at smelting and separation plants are expected to keep supply of medium-to-heavy rare earths tight, further lifting the prices, while prices of light rare earths are expected to remain weak until demand recovers.

Compared to south China, northern regions felt less impact from the outbreak of the COVID-19 epidemic, which also contributed to light and medium-to-heavy rare earths price movements in opposite directions.