assistance regarding current basket price, page-34

Economics 101

When Supply exceeds Demand, the product Price may equal CoP or may be lower.
When Price equal CoP or lower, Suppliers stop producing due to losses.
Therefore, the productsd Price has to rise so that Suppliers produce into the market (with reasonable profit for cost of capital and risks).

At some point in time, Demand can exceed Supply due to Suppliers shutting down or growth in demand exceeds supply.
Then, Consumers are willing to pay high price in a sellers market. Producers can make super profits as the time to start new mines and build new processing plant restrict new suppliers and more supplies into the market.


At present it is a buyers market due to lower demand than previous years and increasing supply from producers outside China.

Market forces will lead the supply and demand back to equilibrium or into a supply shortage.
- loss producers shutting down
- suppliers cutting down output
- stockpile of stocks depleting
- demand recovery and growth

*** There are full of reports that supplies from China is reducing and demand is increasing...

The US central bank’s forecasts for growth are more optimistic than Wall Street’s. The median estimate of private forecasters in a Bloomberg survey calls for an expansion of 1.9 percent this year and 2.7 percent next year.
http://www.bloomberg.com/news/2013-06-21/fed-seen-by-economists-trimming-qe-in-september-with-end-in-2014.html

Improving US economy, tapering QE, leads to appreciation of USD.
The recent sell off by US funds of foreign assets are in anticipation of USD appreciation.
Increase exports to US from China, Japan, Europe and others will accelerate into stronger world economic growth.

Growing exports by China will improve China economic growth and increase China domestic demand for REs and REs prices. And the resulting stronger world economic growth will increase demand for LYC products and prices.


*** There are many predictions that demand and prices for RE products will improve in the second half of 2013

...that there was speculation that China was selling rare earths below production costs to generate revenue. Clearly the formula of selling below production cost cannot go on forever and he was guessing a turnaround on prices in the next 6 months.....

...that Japan’s Showa Denko will resume production at two Chinese rare-earth alloy plants as early as this month after keeping the operations virtually suspended since August. The reason, he states is that the company expects a recovery in demand for hybrid vehicles, and therefore for rare earth alloys including neodymium and dysprosium.

- See more at: http://investorintel.com/rare-earth-intel/medallion-up-45-pele-up-18-79-montero-up-12-5-and-northern-minerals/#sthash.1xOB8F1B.dpuf


Japan’s economic revival boosts China’s rare-earth exports
Posted on June 21, 2013 by Asher Berube

June 21, 2013 (Source: Recycling International) — China/Japan: China’s exports of rare-earth metals have rallied over the last six months owing to low prices and demand from a ‘buoyant’ Japanese economy, the ‘Wall Street Journal’ has reported.

.....Companies in Japan and Europe are picking up more rare earths in response to a draw-down in their stockpiles, argues the China Association of Rare Earth Industry. However, Japan has been making efforts of late to reduce its dependency on China by locating its own rare-earth sources –

See more at: http://investorintel.com/rare-earth-press/japans-economic-revival-boosts-chinas-rare-earth-exports/#sthash.oh2dA1LN.dpuf