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Certain market experts believe that demand growth for some REEs is supply constrained (e.g., magnet materials are
often mentioned) and that an increase in global production of these rare earths could actually accelerate demand
growth. Since REEs are used for many new technologies, the pace of technology innovation could also continue to
boost REE demand. According to the IMCOA report, annual global demand growth for REEs from 2014 to 2020
could average 7.5% p.a. overall. Within this forecast, however, there is a significant variation in demand by end-
use. For instance, demand for REE magnets using Nd, Pr, Dy, Sm and Tb is expected to average annual growth of
9.3% p.a., while demand for REE phosphors, which include Eu, is expected to experience no growth. Other REE
uses that are expected by IMCOA to have the strongest demand growth from 2013 to 2020 are glass (9.8% p.a.),
ceramics (6.5% p.a.) and metal alloys (6.0% p.a.).
Trends affecting prices of REE products
The prices of REEs are quoted in different forms, including oxides, metals, ferroalloys, and cerium carbonate
concentrate (with approximately 45% TREOs). The marketability of REE concentrates will depend on the
concentrate grade, the distribution of REEs in the concentrate and the types of impurities contained in the
concentrate. Mixed REE concentrates are often then separated into individual REOs or groups of similar REOs that
can be sold or can be tolled for further refinement.
According to
(“Metal Pages”), weighted average quarterly prices in U.S. dollars of REOs of
99% purity, FOB China increased more than 1,100% from the end of 2009 through the third quarter of 2011. Since
peaking in the third quarter of 2011, REO prices have fallen dramatically, with average quarterly prices for the
fourth quarter of 2014 at a level 85% lower than the quarterly average peak in 2011. La oxide and Ce oxide
decreased from highs exceeding $150 per kilogram in mid-2011 to around $4.50 per kilogram for 99% oxides as of
December 31, 2014. Average prices of La oxide and Ce oxide for the first two months of 2015 declined another
5.8% and 4.2%, respectively, from the average of the fourth quarter of 2014 due to relatively weak global economic
activity and a continued reluctance of major REE customers in China to restock these materials prior to the Chinese
New Year. Although REE prices, other than La, remain above their 2009 levels, recently announced financial results
of certain major Chinese rare earth companies and China’s ongoing consolidation of its rare earths industry may
suggest that prices may have impetus to move higher. Recent reports have indicated that domestic Chinese prices for
Dy and Tb have increased 21.5% and 47.7%, respectively, since last November, largely due to progress in China’s
campaign against illegal mining.
Supply and demand factors for REE products that could positively impact REE prices include the following, among
other factors:
the use of Nd, Pr, Tb and Dy in high-strength, NdFeB magnets that are critical to hybrid and electric
vehicles and the increased construction of wind power generation facilities, particularly large off-shore
installations;
the use of Sm in high-performance Sm-cobalt permanent magnets;
the use of La and Ce for NiMH batteries that are utilized in hybrid and electric vehicles;
the use of Eu, Tb, Y and Ce in the production of compact fluorescent and LED light bulbs;
the use of high-strength NdFeB magnets in the miniaturization of electronic products;
the use of La in FCCs by refineries processing lower quality crude oil that consumes greater quantities
of the catalysts;
the increased use of REEs in the drive to improve energy efficiency and reduce greenhouse gases, or
GHGs, by the United States and the European Union;
China consolidating its REE industry and closing small, inefficient and polluting REE producers;
the stockpiling of certain REE products, tightening control of export volumes through licensing and
increases in production taxes by China;
the use of Ce in glass, ceramics, glass polishing, and advanced water filtration applications;
the continued research and commercialization of new applications for REE products; and
the rising costs in China due to stricter environmental controls and rising wages.
