Rare earths prices sink to lowest since 2020 as China ramps up supply

July 13, 2023

MELBOURNE, July 13 (Reuters) - Prices for rare earths sank to their lowest since late 2020 this week as soft demand from green energy companies and the automotive sector combined with rising supply from top producer China, analysts said on Thursday.

Concerns have grown that China could further restrict exports of the strategic minerals after it limited exports of germanium and gallium late last month.

But the sharp drop in prices reflects a weak patch in demand and plentiful supply, as China acts to shore up its dominance in the market, analysts said.

"The demand side has not been super strong and the key weakness has been wind turbine installations," said analyst Dan Morgan of Barrenjoey in Sydney.

"If you’ve got 90% market share of magnet processing capacity, there’s a goldilocks price where you earn a return but you don’t encourage anyone in the rest of the world to build capacity," he added.

Rare earths are a group of metals whose strong magnetic properties make them critical to sectors including electric vehicles and defence because of the energy efficiencies they allow.

https://www.reuters.com/markets/commodities/rare-earths-prices-sink-lowest-since-2020-china-ramps-up-supply-2023-07-13/?rpc=401&