China Export Quota Cut Lifts Rare Earth Oxides Price

International price of rare earth surges recently. Especially, price of oxides increased to 4 times of the level in the beginning of the year when major suppler of China reduces the export volume significantly for second half of the year. The oxides supply gets tighter when the exporters try to ship higher valued metallic rare earth materials than oxides.

Lanthanum and cerium are used in oxides for capacitor and catalyst materials and polishing agent among rare earth while neodymium and dysprosium is used in metallic materials for motor magnet materials.

International price of lanthanum oxide is US$ 23.50 per kilogram, which is 3.7 times of the level in the beginning of the year. The price of cerium oxide is US$ 22.50, which is 4.6 times of the level in the beginning of the year. The buyers pay the price and charge for export license, according to rare metal trader source. Government of China, which represents more than 90% of world rare earth supply, controls the export volume through export license. However, the export license is traded in China. Outsider traders without government permission can export rare earth by purchasing the license.

Chinese government announced in July it reduces the export volume by 40% in 2010 from 2009. After the announcement, the license premium surged. Japanese rare metal trader said some Japanese buyers paid US$ 15 per kg for the license for spot lanthanum purchase transactions.

International price of metallic rare earth also surges when Chinese government reduces the export volume while the demand increases for hybrid vehicle and eco-friendly appliances. Especially, dysprosium price doubled from the beginning of the year to July and hit near US$ 370 per kg temporarily when speculators hold the inventory with expectation for higher price. Metallic neodymium price also reached more than US$ 60 without the license premium, which is 2 times of the level in the beginning of the year.

Metallic rare earth supply is limited and dysprosium is produced only in southern China. Metallic rare earth price is around 5 times of oxides. Even after the surge, the price of oxides is around a third of metallic rare earth. Chinese exporters try to maximize the profit under the limited license by focusing on metallic products. Under the condition, the oxides supply gets tight supporting the price surge.