Via Metal Miner
The Rare Earths MMI (Monthly Metals Index) saw a massive rebound after four months of sharp declines. All in all, the index rose by a whopping 14.36%. This enormous increase could indicate that prices for rare earth metals finally found a bottom between March and April.
China's mining and processing industries continue to experience a drop in profitability despite the nation's attempts to keep its grip on the critical rare earths market. A key state-owned company, China Rare Earth Resources and Technology, reported a 45.7% decline in net profit and a 5.4% decline in sales in 2023. Revenues from other Chinese manufacturers of rare earths similarly decreased by 60-79%.
The primary causes of this decline in profits are China's economic problems and other nations' readiness to establish their own supply chains for rare earth elements. China has long held a commanding position as the world's largest producer of rare earths. But the nation's industry ministry recently admitted that rare earths now remain "undersold" and "wasted" as a result of "vicious competition."
China's rare earth sector continues to experience a "fundamental stage" of fast growth and structural alterations in response to these issues. Meanwhile, the industry ministry seems to want stricter rules, including a requirement that importers and exporters comply with export control and international trade legislation, as part of the nation's attempts to preserve market dominance.
Despite these setbacks, China remains at the top of the global rare earths market. The nation still has around 40% of the world's stocks of rare earth elements, with Myanmar, Australia, Russia, and India next in line. Even if other countries progress in building their own rare earth capabilities, China's well-established infrastructure and rare earth processing capacities remain ahead of the rest of the globe.
To withstand a precipitous decline in rare earth pricing and waning demand in China, Australia's Lynas Rare Earths company is buckling down on prices and expenses. The firm recently announced a 74% decrease in net profit for the first half of the year, primarily due to declining pricing for neodymium and praseodymium (NdPr), its two primary products.
"As we're looking to a market with softer pricing, it is essential that we keep a laser-like focus on our cost performance," said Amanda Lacaze, Lynas' CEO and managing director. However, the company remains "very positive" about the long-term picture, estimating that supply will need to increase by 81% to fulfill projected demand by 2035.
The decline in Chinese rare earth demand and Lynas' subsequent tightening of prices could negatively impact companies relying on rare earths as key product inputs. Given this, rare earth metal sourcing companies should look out for the following:
By the Metal Miner Team
MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends,… More
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