Rare Earth Metal Prices Go Parabolic

Tyler Durden's picture

Back in October we asked readers if they have "Ever heard of the oxides of Lanthanum, Cerium, Neodymium, Praseodymium and/or Samarium?" We added that "With price surges between 250% and 600% in one quarter, you may wish you have." As we further predicted, courtesy of Chinese attempts to corner the rare earth space, these oxides were due to explode much further, because as their name implies, these compounds are "rare", and happen to be mostly contained in one country: that's right China. Well, for those who decided to give it the good old speculative college try, you may now retire. As the chart below shows, the YTD moves in the oxides of Dysprosium, Europium, Neodymium, Lanthanum, and all the other ones, have not doubled, not tripled, but in same cases, seen their prices increase tenfold! And people ridicule the silver "bubble"... The extra benefit: the CME's "risk management" group is completely powerless to control the rate of ascent. And judging by the charts below, the rate is certainly worthy of escape velocity. What happens next is that plasma TV purchase one may have putting off for months could end up being costly, after TV producers are forced to double the prices of finished goods, not doing much to help hedonically adjusted core inflation.

Below is a chart of the oxides of Dysporsium, Europium, Neodymium and Lanthanum.

The reason for this dramatic doubling of prices in just the month of June if due to China, which has realized it has a complete monopoly on the supply, and as we predicted in October, would be only a matter of time, before it decided to see just how far it can push prices. Per Bloomberg:

Prices of the rare earths used in lasers and plasma televisions more than doubled in the past two weeks as China tightens control of mining, production and exports, according to market researcher Industrial Minerals.

The cost of dysprosium oxide, used in magnets, lasers and nuclear reactors, has risen to about $1,470 a kilogram from $700 to $740 at the start of the month, Industrial Minerals said in an e-mailed statement. Europium oxide, used in plasma TVs and energy-saving light bulbs, has more than doubled.

China, supplier of 95 percent of the 17 elements known as rare earths, has clamped down on rare-earth mining and cut export quotas, boosting prices and sparking concern among overseas users such as Japan about access to supplies. The government may further reduce export quotas, pushing prices higher, Goldman Sachs & Partners Australia Pty said last month.

“China has long said it will consolidate the industry but it’s moving more rapidly than many observers anticipated,” said Dudley Kingsnorth, a former rare earths project manager and now chief executive officer of Perth-based advisory Industrial Minerals Co. of Australia. “There might be an element of speculation but I think the price rises have been driven by people who are desperate for the product.”

The world’s most populous nation will raise standards for exporters and won’t approve new project expansions in an effort to curb overcapacity, illegal mining and sales, the government said last month. The Ministry of Land and Resources said yesterday it wants to set aside some rare earth deposits.

Where is Goldman opening its next office:

China’s Inner Mongolia Baotou region produces so-called
light rare earths such as lanthanum, cerium and samarium. Heavy
rare-earth production, concentrated in the south of China such
as Ganzhou, includes the elements dysprosium, gadolinium and

So which end products are about to see their prices surge to pass through these ridiculous input cost increases:

Rare earths are used in wind turbines, hybrid cars and defense applications such as guided missiles. The market for the minerals may double to as much as $6 billion by the middle of the decade, according to an April 21 report by Ernst & Young LLP analyst Michel Nestour.

Additionally, as we also observed back in October, while Molycorp has already gone through several bubble iterrations, it may be Australia's Lynas that is poised for the biggest jump.

Sydney-based Lynas is building a $220 million refinery in Malaysia’s Pahang state that will process ores including neodymium and yttrium from Mount Weld, which it now owns.

“Until such time as Lynas and Molycorp are on-stream in the next two or three years, I don’t see much relief” from high prices, Kingsnorth said. “Chinese export quotas are less than world demand.”

A table on the website of Lynas shows the composite price of eight rare earths found at Mount Weld project has surged to $203.60 a kilogram on June 13, from $92.84 on March 31 and $11.59 in 2007.

“Demand for rare-earth elements is increasing in applications that are less esoteric than say, 20 years ago,” Watts said. “China, which is the world’s main commercially developed rare-earth elements source of supply, is reducing exports and increasing its consumption.”

Will China keep export conditions constricted? Maybe, maybe not. If anything this is merely another example of what can happen to global prices when China decides it doesn't want to play ball. It also shows just how great of an impact China can have on supply chains if it so chooses. Our advice to Schumer and the other politicians who are toying with the idea of enacting currency manipulation segilation: leave a sleeping Tiger lie. Because if the rare earth metal space is any indication, it won't take much for China to make sure reexported inflatin in the US surges by a factor of 10 in precisely zero time, sending the US economy spiralin out of control faster than one can spell hyperinflation.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Pladizow's picture

Yeah but as this has happened to the elements look at what has happened to the share prices in the last couple of months - they have moved in the opposite.

Perhaps a similar story here as with gold, i.e., the share prices are warning of a colapse in the price of the elements or the share prices are grossly underpriced.

I hope the later.

JW n FL's picture

Maybe China can Buy Down some of the 1,200%(+ ish) Leverage that weighs on the Yaun?


Fuck, even in America our Dollar is only Leveraged 120%(+ ish).. LOL!! (ish)

rocker's picture

I thinks it is called Manipulation. Look at all the miners. What do you want to own?

Shares of Goldman, BAC or the Morque, (price is truth). Maybe Net Flix, Rimm or Nokia, Price is Manipulated.

Iwill still buy the miners on a average in basis and all the physical I can. I want real stuff. No counterfeit stocks.

When the manipulators decide they got enough on the cheap. We will here Upgrade.

A Nanny Moose's picture

That phrase always reminds of an episode of SNL with Dennis Miller doing the news...

"Where do I get some tat, and how do I trade it for the other thing?"

Sudden Debt's picture

Funny thing about REM's.

Even the rarest of the all is more than 200 times more available than gold.


TheTmfreak's picture

I guess insert Demand (or manipulation) as the excuse for that.

Sudden Debt's picture

The most abundant rare earth elements (REE) are each found in the earth’s crust in amounts equal to nickel, copper, zinc, molybdenum, or lead - Cerium is the 25th most abundant element of the 78 common elements in the Earth’s crust. Even the two least abundant REEs (Thulium, Lutetium) are nearly 200 times more common than gold. Overall Rees have an abundance greater than silver and similar amounts to copper and lead.




Recovery rate overall is at 63%!!


and most of the stuff oxidizes when you buy it so storing it is a mess.

TheTmfreak's picture


Learned all about zinc and molybdenum taking geology classes. Good luck finding that in quantity. You can find it just about everywhere since the shit basically can't be destroyed.

FreedomGuy's picture

Colorado had lots of it. You gotta get the EPA and other agencies to lighten up and get long term costs in line to mine it profitably.

Manthong's picture

Redux of the '07 rhodium spike maybe?

NidStyles's picture

this is what I was thinking. Pump it up and dump it for all of those sucker's that are ridiculous enough to buy into it near the top.


I think we will probably see some revision's to the EPA regulation's on mining in the Rockies soon.

jus_lite_reading's picture

YAY!! my collection of 500 used cell phones just increased in value by 10000%! Me is happy!

camoes's picture

I wonder where they went, I used to hate watching MTV play 20x per day Shiny Happy People

Roy Bush's picture

More rare are the facilities that can process REM's....Tyler, do you have any insight on the continued protests against Lynas regarding the new malaysian plant and whether or not processing the Lynas material actually would have effects on the local population.  Will this thing get built or what?  Otherwise, Lynas isn't worth much.

TheDriver's picture

Which is why I think Great Western, which owns Less Common Metals, is a better play than Lynas right now. http://www.gwmg.ca

camoes's picture

Unobtainable bitchez

Oh regional Indian's picture

The joke I think is unobtanium.

ummmmm, yum.


scratch_and_sniff's picture

Well lets hope you filled your boots then Tyler.

FunkyMonkeyBoy's picture

Are there paper derivatives of these rare earths on COMEX?

'Cause i like it that COMEX makes prices cheap.

malikai's picture

I'd love to score some puts here.

The Axe's picture

The real market is the black market for rares....and you can buy them way cheaper then that Bloomberg chart...chief..

TheTmfreak's picture

What is the going rate for Chinese babies? I'm pretty sure they're dirt cheap. I'd like that figure in gold as well.

1000 chinese babies = 1 gold oz?

Hugh G Rection's picture

results are skewed when you factor in female chinese babies and their negative return.

TheTmfreak's picture

Thats a good point.

Black market doesn't work on the hocus pocus liberal nonsense. Supply and Demand.

Female Chinese Baby = Huge Supply Little Demand

Male Chinese Baby = Small Supply, Huge Demand

Nuff said.

Sudden Debt's picture

Actually it's the other way around.

When a girl is born, the press in needles into their heads so they dy.

Not many females anymore. And when the boys grow up, it's very hard for them to find a partner.


Hugh G Rection's picture



Opportunity cost of having female chinese baby= 9 months and medical expense of disposing of the fetus. Slightly less costly with ultrasound and abortion....

Cognitive Dissonance's picture

China is the new America................(potential) economic power wise.

williambanzai7's picture

Can we merge and call ourselves Chibama?

Sudden Debt's picture

Can Belgium join to?





Arius's picture

CBA or ABC (in order of importance....silly me still thinks West is more important....)

Sudden Debt's picture

And the good part is that we ALL HAVE COOLAID RED in our national flags, so color picking won't be that hard.


Hugh G Rection's picture

patience guys... this whole NWO thing takes time.

Cognitive Dissonance's picture

It's all up to Wen.

But I'm sure Wall Street is a go as long as they can handle the IPO spin offs of every single USA Federal asset. I'm sure that will keep them busy with a few extra months of printing profits. When they are done they can take it all private, then public, then.......

Churn the chumps.

williambanzai7's picture

Those all sound like tribes on the planet hemorrhoid.

quark288's picture

So very soon Mr. Dudley would find his Ipad also costing more, wonder what would he advise us to eat next....


tmosley's picture

I'm pretty sure that it's not that all the rare earths are in China as much as all the currently operating rare earth PRODUCTION is in China.  There are plenty of rare earth mines in the American Southwest that are currently mothballed due to low prices.

Of course, that doesn't mean that prices won't continue to rise.  Just be aware that the supply disruption has a limited lifetime.  And that lifetime is much less than that of the supply disruption for silver.

Sudden Debt's picture

 China controls besideds Yttrium 36% of all rear earths on the planet:


Shell Game's picture

Kind of like Bakken oil?

musicmax's picture

Long "I Just Want to Celebrate" 45's, bitchez!

NotApplicable's picture

Got needles? I hear they're kinda rare these days.

gmrpeabody's picture

Needlyndium and turntableum are rare indeed. Even recordsium is getting pricey.

Delta-Bravo-Echo-Charlie's picture

Rare Earth minimg companies are on sale right now! Get 'em while they're hot

spartan117's picture

Someone queue Denninger to call for a "selective" default on US debt held by China! 

asiafinancenews's picture

Excellent, and why not?  China is in "selective default" on China's national debt held by foreigners including Americans and Europeans: http://www.marketoracle.co.uk/Article28271.html