if re price drop further? , page-48

Jantimont, "In previous years, the quotas have always been exceeded (page 19)"

I think this needs clarification in that the data relates to production quotas which have clearly been exceeded by both illegal mining & non central Govt controlled entities, rather than export quotas. All reports out of China for the past 12 months or so have been about bringing this under control thru consolidation of smaller enterprises into the larger organisations such as Baotou. Some conflicts here between State & Central Govt controlled companies, mainly in the South, and this has probably delayed the implementation of the central trading platform. Not sure of the outcome but the South was suggesting they would establish their own platform so potentially there could be one in the North under Baotou, presumably LRE, and another State run platform in the South for HRE. Little impact on ROW as both would still be contained by the overarching export quotas, now separated for LRE & HRE.

According to HongPo, ProEdgeWire's China "Deep Throat":
"Baotou Rare Earth Products Exchange has decided to announce the definitive rules and system for its new rare earth spot trading platform at the Baotou Rare Earth Forum. This suggests that China’s rare earth products exchange will ‘formalize’ production after August 2013."

Although, "China’s mining quota for 2012 was about 90,000 metric tons; however, the actual output of rare earth production actually reached total about 130,000 to 150,000 metric tons due to illegal rare earth mining and producing at last year."

He concludes: "I think that the successful trading platform will help to establish justifiable and transparent prices while also contributing to China’s rare earth market stability. Nevertheless, China’s rare earth industry is slumping as reflected by poor sales and a sharp drop in demand. There are other serious issues needing to be resolved. These include illegal rare earth mining, producing, trading and smuggling, which are plaguing China’s rare earths market. It will also impact the rare earth spot trading platform. For this reason, I believe that serious challenges are lurking behind China’s first rare earth products exchange."

http://www.proedgewire.com/rare-earth-intel/baotou-ree-products-exchange-will-launch-new-spot-trading-platform/

So it would seem China has it's own problems getting the RE market under control but most worrying is the report on continued poor demand given that Lynas data suggests that 80% of demand in 4 of the main 5 RE markets now exists inside China. Have the bubble prices resulted in greater permanent demand destruction thru substitution than envisaged? Or is it a lagged effect as RE is designed back in to new models? Again on Lynas's recent data they could well have stimulated the rollout of LED over phosphors and reconfigured the CREO suite in the process. Will be interesting to see if DoE does an update there this Nov.

On the other hand export quotas have remained static for the past 2.5yrs at 31ktpa and only half drawn. Begs the question, how much of Chinese illegal production is finding it's way to ROW and not showing against official quotas?