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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 availability and production of these rare earths could
actually accelerate demand growth. Since REEs are used for many new technologies, the pace of technology
innovation should also continue to boost REE demand. According to the IMCOA report, annual global demand
growth for REEs from 2015 to 2020 could average 6.5% 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 and Sm is
expected to average annual growth of 8.8% p.a., while demand for REE phosphors, which include Eu, Tb and Y, is
expected to experience almost no growth. Other REE uses that are projected by IMCOA to have the strongest
demand growth from 2015 to 2020 are glass (8.9% CAGR) and metal alloys (6.2% CAGR).
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
www.metal-pages.com(“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 2015 at a level 93% 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 $2.00 per kilogram for 99% oxides as of
December 31, 2015. Although several REE prices remain above their 2009 levels, financial losses reported by the
rare earth operations of the major Chinese rare earth companies, continuing cost pressures from the new resource
taxes, labor costs and environmental regulations, and China’s ongoing consolidation of its rare earths industry may
give prices the impetus to move higher.
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 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.