Pr/Nd oxide up again, market sentiment bullish, page-495

No arguing that China is trying hard to match supply to demand by cutting severe overcapacity issues through enviro inspections and clamping down on "illegal" production. Where our views differ is I believe China never intended REO prices (NdPrO more specifically) to rise as quickly as they did, especially Aug-Sep.
The article from China Daily sums it up.
http://www.chinadaily.com.cn/business/2017-08/10/content_30402190.htm

And the ensuing drop in REO prices is clearly a sign of market shock from the rapid rise in REO prices, from metal manufacturers not being able to absorb the costs or pass them on to downstream NdFeb manufacturers and consumers stockpiling product and now sitting back waiting for prices to retreat before replenishing stockpiles. . There were a number of reports on "social media" that NdPr metal manufacturers were struggling with the rapid increase in REO prices.


As for being flustered over spot prices, I simply can not see any reason to ignore them ATM. I still think China has a bit of work to do getting total control over the market and its going to need a period of stable supply/demand dynamics before we can rely on NRE listed prices as a solid guide for REO price direction. ATM I still feel NRE listed prices are simply reacting to market conditions rather than being a guide and that spot prices are a more suitable source of market direction.

Regardless of the differing views I think one thing we certainly can agree on is that the future direction of the RE market is very positive. REO prices look to be stabilizing now and with talk about SRB stockpiling in Nov should provide further support during the Oct-Nov low period.
There are going to be some hiccups along the way considering just how much of a basket case the Chinese RE industry has been over the last 7 years. Nonetheless China is making good progress and Lynas will benefit greatly.