Issue 16-08
Wednesday
3 August 2016
consulting services
Argus Rare Earths Monthly Outlook
Outlook
The month ahead
Rare earth prices are likely to remain stable in the month ahead, as lacklustre demand, a summer lull in trading, and an
uncertain economic outlook continue to weigh on prices.
The next 3-6 months
Rare earth prices are likely to remain lacklustre, as the market is oversupplied. Large consumer stockpiles will have to decline and China’s illegal rare earth production fall, if prices are to eventually recover.
12 months forward
Prices may eventually strengthen in 2017 as cost-curve pressures force producers to implement large-scale production
cuts. Strong demand across high-growth applications may strengthen demand for some rare earth oxides.
Cerium fob China
Average monthly cerium fob metal
and oxide prices edged slightly lower
in July, as suppliers cut offers in an
attempt to spark sales. The average
price for fob China 99pc cerium metal
softened to $5-5.40/kg while fob
99pc cerium oxide dipped to $1,5371,768/t. In Europe, the average price
for 99pc cerium oxide cif EU remained
unchanged for the month at $1.70/1.84/kg.
OUTLOOK: Steady
Cerium fob China
$/kg
$/t
Ce metal (China fob, 99pc, left axis)
12
Ce carbonate (China fob, 45pc, left axis)
4,500
Ce oxide (EU cif, 99pc, left axis)
10
Ce oxide (China fob, 99pc, right axis)
4,000
3,500
8
3,000
6
2,500
2,000
4
1,500
1,000
2
500
0
0
2015
Metals
illuminating the markets
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5,000
2016
2017
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
| 2
International pricing series
Lanthanum fob China
Average monthly lanthanum prices reflected mixed
sentiment in July, amid thin market liquidity. The average
fob price for 99pc lanthanum oxide softened to $1,7752,025/t while fob 99pc lanthanum metal prices were
unchanged for a third straight month at $4.7-5.4/kg. The
average price for 99.999pc fob lanthanum oxide weakened to $4.03-5.03/kg, from $4.11-5.11/kg.
$/kg
10
La oxide (China fob, 99.999pc, left axis)
$/t
8,000
La metal (China fob, 99pc, left axis)
6,000
La oxide (China fob, 99pc, right axis)
5
4,000
2,000
0
OUTLOOK: Steady
Yttrium fob China
Average monthly prices for yttrium oxide and metal
prices weakened slightly amid thin demand. Fob prices
for 99.9pc yttrium metal softened to $33.5-35/kg while
99.999pc yttrium oxide fob prices dipped to $3,6003,850/t. In Europe, the cif price for 99pc yttrium oxide
was unchanged at $4.5-5/kg.
OUTLOOK: Steady
0
2015
Average monthly neodymium metal and oxide prices
weakened because of low demand from the downstream NdFeB magnet sector. Fob 99pc neodymium
metal prices softened to $50.25-52.25/kg while fob 99pc
neodymium oxide prices dipped to $38,562-40,625/t.
In Europe, 99pc neodymium metal cif prices softened
slightly to $40.63-43.00/kg
2017
$/t
20,000
$/kg
80
Y metal (China fob, 99.9pc, left axis)
Y oxide (EU, 99.999pc, left axis)
60
Y oxide (China fob, 99.999pc, right axis)
40
10,000
20
0
0
2015
Neodymium fob China
2016
$/kg
100
2016
2017
Nd metal (EU, 99pc, left axis)
Nd metal (China fob, 99pc, left axis)
Nd oxide (EU, 99pc, right axis)
Nd oxide (China fob, 99pc, right axis)
$/t
80,000
80
60,000
60
40,000
20,000
40
OUTLOOK:Steady
Praseodymium fob China
Average monthly praseodymium oxide and metal prices
edged slightly lower in July, weighed down by weak
market demand. Average fob prices for 99pc praseodymium oxide softened to $48,250-52,375/t while fob
metal prices weakened to $76.25-86.25/kg. The outlook
for prices remains stable amid a surplus of material and
weak consumer demand.
2015
2016
2017
$/kg
200
$/t
120,000
Pr metal (China fob, 99pc, left axis)
Pr oxide (China fob, 99pc, right axis)
160
80,000
120
60,000
40,000
80
20,000
0
40
OUTLOOK: Steady
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2015
2016
2017
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
| 3
Price outlook
„„Rare earth prices were mixed in July, amid thin
liquidity.
„„Material oversupply, increasing substitution and
growing economic uncertainty have dampened price
expectations going forward.
„„Liquidity in Europe remains particularly thin as the
industry endures a seasonal slowdown in business activity over the summer.
Chinese prices for rare earth metals and oxides were mixed
in July, as thin market demand prompted suppliers to use
contrasting strategies in a bid to offset losses. Chinese praseodymium-neodymium and gadolinium markets extended
losses as some suppliers cut prices in an attempt to generate
sales, while dysprosium and terbium prices were stable to
slightly stronger as suppliers withheld material in order to
defend slim profit margins.
Chinese and European rare earth markets face weak demand,
with a combination of oversupply and thin liquidity stemming from a seasonal summer lull in market activity exacerbating an already challenging environment for suppliers.
Prices for most rare earths markets remain at historical lows
owing to the presence of large stockpiles left over from a
sudden price spike that followed China’s decision to slash its
annual export quota by 40pc in late 2010. China’s illegal rare
earth production, estimated at as much as 80,000 t/yr by the
Chinese chamber of commerce, has also weighed heavily on
market prices in recent years.
In addition, rare earth prices face fresh downward pressure
as leading manufacturers pour resources into new technologies that either reduce or eliminate the rare earth content
from their products. Last month, Japanese carmaker Honda
announced that it plans to incorporate a new neodymiumiron-boron (NdFeB) permanent magnet free of the heavy
rare earth elements dysprosium and terbium into the drive
motor of its new hybrid electric vehicle model, the Honda
Freed. The announcement raises the prospect that other
automakers may seek to follow Honda’s lead, dampening the
outlook for heavy rare earth consumption from the NdFeB
magnet sector.
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Market fundamentals are also being compounded by an
increasingly uncertain global economic outlook. Last month,
the IMF cut its global growth projections after a UK referendum vote to leave the EU. And it is warning of more contagion globally if uncertainty persists about the future terms of
trade between the UK and EU.
The IMF projects in its July World Economic Outlook that
global economic growth will be 3.1pc this year and 3.4pc in
2017. Each forecast is 0.1 percentage points lower than in
the April report. The IMF cut its forecast for UK GDP growth
to 1.7pc in 2016 and 1.3pc in 2017, a reduction of 0.2 percentage points and 0.9 percentage points, respectively. The
outlook for the eurozone is marginally better, although the
region's growth forecast would have been revised higher
under a different referendum outcome, the IMF says. It has
lowered the US' growth projection by 0.2 percentage points
to 2.2pc in 2016, noting a strong dollar and lower energy
sector investment.
Uncertainty over future trade negotiations between the UK
and the EU is a key risk for the forecast, the IMF says. And
potential spillover effects are not limited to Europe. China's
GDP growth rate, forecast at 6.6pc this year and 6.2pc in
2017, could be 0.1 percentage lower in both years because
the EU is an important trade partner, research director Maurice Obstfeld says.
Global economic growth could slow to as much as 2.8pc this
year, with effects on advanced and emerging economies,
under some IMF scenarios. The most severe scenario involves
unsuccessful trade negotiations between London and Brussels, with trade links reverting to WTO rules and a large por$/kg
Other metals
Dy (China fob, 99pc, left axis)
1,500
Tb (China fob, 99pc, left axis)
150
Eu (China fob, 99pc, left axis)
Gd (China fob, 99pc, right axis)
1,000
Sm (China fob, 99pc, right axis)
500
100
50
0
0
2015
2016
2017
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
tion of UK-based financial services moving to the EU. But the
effects of uncertainty over the UK's eventual departure from
the EU are hard to quantify, the IMF says. The alternative
scenarios depend on a confluence of negative factors and
are less likely. "The market reaction has certainly been reassuring," Obstfeld says, as central banks stepped in to provide
liquidity. The IMF may reassess its outlook in the next quarterly update. For now, "negotiations have not started… there
is a lot of uncertainty," he says.
In light of the thin market liquidity and wider economic uncertainty, China's Ganzhou Rare Earth Association rolled over
its guide prices for ion-absorption rare earth (RE) concentrate for the second half of July. The guide price for medium
yttrium and rich europium concentrates was unchanged from
the second half of May at Yn190,000/t ($28,400/t). Similarly,
the guide prices for high yttrium concentrate in the Longnan
and Anyuan regions remained stable at respective rates of
Yn200,000/t, and Yn190,000/t.
The spot market was mixed, as a scattered selection of bids
and offers pulled prices in different directions amid trickling
liquidity. Liquidity in Europe remains particularly thin as the
industry endures the seasonal slowdown in business activity
that traditionally occurs in July-August.
Chinese domestic prices for 99.5-99.9pc lanthanum oxide dipped to a range of Yn11,000-12,500/t, down from
Yn12,500-13,500/t at the end of June. The export market
accounted for similar losses with fob prices weakening to
$1,700-2,000/t, down from $1,850-2,100/t at the end of June.
Prices for lanthanum metal remained unchanged in comparison. Domestic prices for 99pc lanthanum metals was stable
for the month at Yn29,000-31,000/t while export prices
remained anchored at $4.70-5.40/kg.
Domestic prices for 99pc praseodymium-neodymium oxide
softened to Yn252,000-257,000/t from Yn260,000-266,000/t
at the beginning of July. Export prices showed similar
dynamics, weakening to $39,000-42,000/t from $40,00043,500/t at the beginning of July. Praseodymium-neodymium
metal prices accounted for similar losses with domestic
99pc metal prices dipping to Yn322,000-329,000/t from
Yn333,000-338,000/t at the beginning of July. Export prices
also edged lower with 99pc metal fob prices weakening to a
range of $50-52/kg, down from $51-54/kg at the beginning
of the month.
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| 4
Chinese dysprosium prices extended losses in July, as thin
consumer demand continued to weigh heavily on market prices. Domestic prices for 99.5pc dysprosium oxide
weakened to Yn1,200-1,230/kg from Yn1,210-1,250/kg at
the beginning of July. Corresponding fob prices softened
from $186-196/kg to $182-190/kg. Dysprosium metal prices
shadowed oxide prices lower. Domestic prices for 99pc
dysprosium metal dipped to Yn1,600-1,700/kg from a range
of Yn1,710-1,750/kg while fob prices declined to $250-265/
kg from $263-278/kg. Chinese prices extended losses in July
as thin consumer demand continued to weigh heavily on
market prices. Domestic prices for 99.5pc dysprosium oxide
weakened to Yn1,200-1,230/kg from Yn1,210-1,250/kg at
the beginning of July. Corresponding fob prices softened
from $186-196/kg to $182-190/kg. Dysprosium metal prices
shadowed oxide prices lower. Domestic prices for 99pc dysprosium metal dipped to Yn1,600-1,700/kg from a range of
Yn1,710-1,750/kg, while fob prices declined to $250-265/kg
from $263-278/kg.
Like other markets, the Chinese neodymium oxide market
saw fresh losses in July amid a further reduction in physical
demand. Prices for 99.5-99.9pc neodymium oxide softened
to Yn250,000-255,000/t from Yn257,000-262,000/t at the
beginning of July. Corresponding export fob prices also fell,
weakening to $38,000-40,000 from $39,500-42,000/t. Neodymium metal prices were similar affected. Domestic prices
for 99pc neodymium metal dipped to Yn322,000-328,000/t,
down from Yn331,000-336,000/t. Fob export prices followed
suit, dipping to $50-52/kg from $51-53/kg.
$/t
Other oxides
800
Dy (China fob, 99pc, left axis)
Eu (China fob, 99.9pc, left axis)
Tb (China fob, 99pc, left axis)
Sm (China fob, 99pc, right axis)
400
20,000
15,000
10,000
5,000
0
0
2015
2016
2017
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
| 5
Price table
Argus rare earths indexes (cumulative averages)
Element
Units
Month index
Jul 16
Moving quarterly
average
Moving yearly
average
Forecast
Jul 17
2
Cerium
carbonate min 45% REO fob China
$/kg
1
1
1
metal min 99% fob China
$/kg
5
5
6
7
oxide min 99% fob China
$/t
1,653
1,701
1,880
2,400
oxide 99% cif Europe
$/kg
2
2
2
3
metal min 99% fob China
$/kg
259
276
303
380
oxide min 99% fob China
$/kg
259
220
221
370
$/kg
68
70
120
170
$/kg
190
204
242
300
Dysprosium
Europium
oxide min 99.9% fob China
Ferro-dysprosium
min 80% Dy fob China
Gadolinium
metal min 99% fob China
$/kg
oxide min 99.999% fob China
$/t
45
45
50
55
22,500
19,592
18,637
31,000
Lanthanum
metal min 99% fob China
$/kg
oxide min 99% fob China
$/t
oxide min 99.999% fob China
$/kg
5
5
5
6
1,900
1,935
2,026
2,500
5
5
6
6
Mischmetal
35% La 65% Ce fob China
$/kg
5
5
5
7
low Zn and Mg fob China
$/kg
19
19
20
26
metal min 99% fob China
$/kg
51
53
53
62
oxide min 99% fob China
$/t
39,593
40,638
40,480
49,000
metal 99% cif Europe
$/kg
52
52
52
59
oxide 99% cif Europe
$/kg
42
42
42
52
Neodymium
Praseodymium
metal min 99% fob China
$/kg
oxide min 99% fob China
$/t
81
84
87
97
50,312
52,035
54,099
61,000
52
54
54
70
40,687
42,386
43,379
50,000
Praseodymium-neodymium
metal min 99% fob China
$/kg
oxide min 99% fob China
$/t
Samarium
metal min 99% fob China
$/kg
15
15
16
34
oxide min 99% fob China
$/kg
2
2
2
3
metal min 99% fob China
$/kg
558
567
625
720
oxide min 99% fob China
$/kg
420
424
427
520
Terbium
Yttrium
metal min 99.9% fob China
$/kg
oxide min 99.999% fob China
$/t
oxide 99.999% cif Europe
$/kg
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35
35
38
46
3,725
3,832
4,414
4,800
5
5
5
6
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
Markets
Rare earth demand continues to soften in line with the onset
of the traditional summer slowdown in trading activity. A
combination of material oversupply associated with illegal
production and large consumer stockpiles left over from the
2010 price spike; material substitution and wider economic
uncertainty continue to weigh heavily on demand expectations.
The Chinese manufacturing purchasing managers' index
(PMI) moved into positive territory in July for the first time
since February 2015, as output, new orders and buying
activity returned to growth, according to the monthly Caixin
survey. Manufacturing PMI moved up to 50.6 for July, rising
above the key 50 level that separates growth from contraction. The PMI was 48.6 in June. Higher prices for raw materials, particularly metals, led to a marked rise in average input
costs after a slight drop in June, which companies passed
on to clients in the form of higher prices for their products,
Caixin said. The rate of increase in costs was the second fastest since September 2013, behind April 2016.
The Chinese government's official manufacturing PMI fell to
49.9 from 50 in June, as heavy rainfall and flooding on the
Yangtze river affected production and transportation, and
some sectors continued to reduce output to tackle continuing oversupply. The National Statistics Bureau's data reflect
the country's large state-run companies, while the Caixin survey covers small and medium-sized businesses.
In Japan, a stronger yen against the dollar reduced the cost
of raw materials but weighed on international demand, with
new exports declining at their strongest rate since January
2013. The Nikkei manufacturing PMI increased to 49.3 in July,
from 48.1 in June.
The eurozone Markit manufacturing PMI moved to 52 in
July, from June's six-month high of 52.8 but remained in
growth territory for the 37th consecutive month. Incoming
new business rose at a weaker pace than in June and, to a
lesser extent, than the average for the year to date, Markit
said. A weaker euro resulted in increased export business,
although it also increased the cost of imports and led to the
first increase in average purchase prices for a year. But that
was not passed on to customers as output charges fell again,
tightening manufacturers' margins.
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| 6
Global rare earth demand, 2015-25
250,000
200,000
Dysprosium
Europium
Yttrium
Lanthanum
Terbium
Samarium
Neodymium
t REO
Gadolinium
Praseodymium
Cerium
150,000
100,000
50,000
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
— Argus Media
The UK manufacturing PMI figure dropped to 48.2 in July
from 52.4 in June, hitting the lowest level since February
2013, amid uncertainty surrounding the UK's vote to leave
the EU in a referendum on 23 June. The decline in production was the steepest since October 2012, with contractions
across the consumer, intermediate and investment goods
sectors, Markit said. The fall in the value of the pound
against major currencies resulted in purchase prices increasing to a five-year high in July, reflecting a rise in import costs
and higher metal and commodity prices. "The improvement in exports was less marked than previously estimated,
blamed in part on sluggish overseas demand," Markit senior
economist Rob Dobson said.
In the US, the Markit manufacturing PMI was 52.9 in July,
up from 51.3 in June and a post-financial crisis low of 50.7
in May. There were signs of renewed momentum in international markets, as new export sales expanded at the fastest
pace since September 2014. Input buying rose for the third
straight month, amid the strongest expansion since October
2015. But manufacturers remained cautious in terms of their
inventory holdings, Markit said, with stocks of finished goods
and pre-production inventories falling from the previous
month. Survey respondents widely commented on higher
steel prices. Strong competition for new work continued to
exert pressure on manufacturers' operating margins, as they
only marginally increased their charges.
The JP Morgan global manufacturing PMI moved up to 51 in
July, from 50.4 in June and to the highest level since November 2015. An increase in output and new orders indicated
that global production could be starting to shift higher after
a weak second quarter, Markit chief economist Chris Williamson said. Recent months had recorded the weakest period of
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
manufacturing expansion since late 2012, when economies
were facing the escalating eurozone debt crisis.
| 7
units
Aircraft market by region and size, 2016-36
40,000
In the aerospace sector, Boeing delivered 199 commercial
aircraft in the second quarter of 2016, outstripping Airbus
with 173 deliveries in the same period. The figures were also
up on the first quarter at 176 Boeing commercial aircraft
deliveries and 197 aircraft in the second quarter of 2015.
Boeing is also in the lead on orders, with 256 commercial aircraft orders so far this year, ahead of Airbus with 227. But in
Boeing's military Defence, Space and Security arm, secondquarter deliveries were down on the first quarter, reflecting
reduced numbers for Apache helicopters and F/A-18 Hornet
fighter jets.
Deliveries increased across all major aircraft programmes.
Deliveries of Boeing's best-selling 737 jet rose to 127 from
121 in the first quarter 2016. In the second quarter it also
delivered 38 of its 787 Dreamliner jets, up from 30 in the first
quarter of this year. For Airbus, second-quarter deliveries
were dominated by 144 of its popular 320 family jet, but only
three new engine option A320 neo. Airbus delivered 15 A330
jets during the quarter, while deliveries of its new A350 XWB
widebody jet rose to eight from four in the first quarter. It
also delivered nine superjumbo A380 aircraft in the second
quarter, up from five in the first quarter. Boeing also saw
higher deliveries of its largest 777 jumbo jet, with 28 delivered during the second quarter, five more than in the first
quarter of the year.
Both Boeing and Airbus released their forecasts for the civilian aerospace sector in June to coincide with the start of the
UK's Farnborough International Airshow, at which aerospace
manufacturers compete for orders. Boeing forecast global
demand for 39,620 new commercial aircraft valued at more
than $5.9 trillion in the next 20 years, in its Current Market
Outlook to 2035. Rival aircraft manufacturer Airbus predicted
demand for 33,000 aircraft valued at $5.2 trillion over the
same period. Boeing’s projection includes demand for 2,380
new regional jets, while Airbus' forecast focuses on aircraft
seating upwards of 100 passengers and freighters of 10t-plus
capacity.
Boeing and Airbus expect demand to be dominated by
single-aisle planes, with Boeing forecasting 28,140 new
single-aisle jets to enter service by 2035, higher than the
23,530 forecast by Airbus. These new narrow-body airplanes
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30,000
20,000
10,000
0
Africa
Region
CIS
Size
Latin America
Middle East
Europe
North America
Asia Pacific
Regional jets
Single aisle
Small widebody
Medium widebody
Large widebody
Source: Boeing
will continue to stimulate growth for low-cost carriers and
will provide required replacements for older, less-efficient
planes, Boeing said. The US firm expects 9,100 new widebody jets to be required in the next 20 years, also dominated
by 5,100 smaller aircraft of that type. But Boeing expects only
530 of the largest wide-body jets, such as its own 777 jumbo
(which is up for redesign) to enter service by 2035. Airbus,
which makes the A380 superjumbo, forecasts a much larger
market of 1,470 for what it terms “very large aircraft” of the
A380 and B777 type.
Both leading aerospace companies expect a major geographical shift away from their traditional North American
and European markets to emerging markets, particularly
in Asia. While airlines in the US and Europe carried 64pc of
global air traffic between them 20 years ago, Boeing expects
that share to shrink to 37pc 20 years from now, when Asia
will account for 48.7pc. Boeing expects demand for the Asian
fleet to almost triple to 16,970 aircraft in 2035 from 6,350 in
2015. It forecasts a market for 11,160 new single-aisle and
3,680 new wide-body passenger airplanes by 2035, plus 320
new production freighters and 580 converted freighters to
cope with growing cargo traffic.
Boeing forecasts that North America will need 8,330 new
planes in the next 20 years. Single-aisle airplanes will make
up an estimated 5,440 of these, or 65pc, and replacements
for older, more fuel-hungry jets will account for 65pc of demand. It expects Europe to require 7,500 new planes, 78pc of
them single-aisle jets, and with replacements accounting for
56pc of total European demand.
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
Supply
| 8
China’s annual rare earth exports by HS classification
t
Rare earth supply continues to outweigh global demand, as
illegal production and consumer stockpiling dampen profit
margins for Chinese producers.
In July, the Chinese government approved the formation
of state-controlled Guangdong Rare Earth Group, part of
reforms to consolidate China's rare earth industry. The new
company will be responsible for consolidation in Guangdong province — one of China's largest producing regions
for heavy and medium rare earths. Guangdong Rare Earth
Group is the fifth to be formed under the government's plans
to reform the country's fragmented and poorly regulated
rare earths industry. Northern Rare Earth Group and Xiamen Tungsten were established at the end of last year and
the integration of Chinalco was completed in March. Jiangxi
provence also approved the formation of the Southern
Rare Earth Group on 28 June. The government is aiming to
complete the asset consolidation for the formation of the last
group — China Minmetals — in the near future. The ministry
of industry and information technology, in conjunction with
other state departments, is overseeing the consolidation
programme. This is aimed at centralising control of China's
rare earths industry, making it easier to implement government policy and curb overproduction and illegal mining.
Outside China, potential rare earth projects continue to face
a challenging path to full commercialisation. Despite weak
market prices and thin demand, these projects continue to
tick off important developmental milestones. Australian rare
earth mining company ASX-listed Peak Resources has been
granted permission to invest an additional $3.1mn in the
Ngualla Rare earth Project in Tanzania after the country's
government approved a second round of funding for the
project. The new investment adds to the $20.3mn in initial
funding provided during the first stage of financing. The
new round of investment will be used to fund a bankable
feasibility study for the project. The study is expected to be
completed by early 2017. Ngualla will produce around 2,300
t/yr of neodymium-praseodymium oxide, 250 t/yr of mixed
samarium, europium and gadolinium carbonate and 5,900 t/
yr of cerium-lanthanum carbonate. In April, Peak Resources
released an optimised flowsheet for the project detailing a
capital cost of $330mn alongside an annual operating cost
of $97mn/yr. Peak's most recent study assumed a 31-year
mine life based on a Jorc-compliant resource of nearly 1mn
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t rare earth oxides (REO) contained in the deposit's bastnaesite zone at 1pc cut-off grade. The zone contains just
22pc of Ngualla's overall estimated mineral resource, but
within this zone 91pc of the resource is in the highest Jorc
measured category and the remaining 9pc is indicated. Peak
announced before the end of the first quarter that it will
strengthen its stake in the Ngualla project on completion
of the second-stage investment. It will increase its overall stake in the Ngualla project to 75pc from 62.5pc, while
strategic partners UK-based Appian Natural Resources Fund
and World Bank investment arm IFC will hold 20pc and 5pc,
respectively.
In Canada, Ucore Rare Metals will team up with an unnamed Alberta oil sands producer to recover rare earth
elements (REEs) and other critical metals from Alberta oil
sands projects. The partnership will benefit from a Canadian
government grant through the Industrial Research Assistance
Program. This will reach $220,000 through cost reimbursement for eligible project expenditures. The grant will be used
to integrate Ucore's Superlig molecular recognition technology into the process flow of the oil sands producer.
Ucore and its partner will absorb the net costs of the project
on a 50:50 basis after the grant contributions. Ucore completed its Utah pilot plant in March 2013. The complex
carries out a number of processes, including the separation
of individual rare earths such as terbium and europium at
more than 99pc purity and dysprosium at 99.99pc purity. The
firm raised financing to develop its processing technology
last year, by signing royalty agreements with investors for
the sale of products and services related to processing rare
earths, as well as other specialty metals and critical materials.
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
While budding rare earth projects face a difficult path to fullscale production, one of the world's largest non-Chinese rare
earth producers has reported impressive results in the current climate of low market prices. Australia-listed rare earths
producer Lynas' sales revenues rose by 25pc in the second
quarter ending 30 June compared with the previous quarter. Lynas reported total gross sales revenue of A$55.9mn
(US$42mn) in the second quarter, compared with A$44.5mn
in the previous quarter.
The company's total sales for the fiscal year ending 30 June
rose to A$196.1mn, a 30pc improvement over the previous year's total of A$148.6mn. Sales volumes strengthened
despite Lynas' decision to stockpile the company's heavy rare
earth mix because of weak market prices. The company suggests this may have reduced sales volumes by around 150t
during the quarter. Lynas announced in May that it would
halt all sales of its more valuable mixed heavy rare earth in
order to stockpile the material in anticipation of stronger
future demand. Lynas said the improved financial results are
a culmination of the company's success in strengthening
production volumes, while solidifying its relationships with
| 9
strategic customers in Japan and China. Increased production volumes allowed the company to consolidate its leading
position as an neodymium-praseodymium (NdPr) supplier
to neodymium-iron-boron (NdFeB) magnet makers in Japan
while maintaining sales to customers in China.
Lynas has sought to strengthen its NdPr production capacity and utilisation in recent years, in light of the growing
demand for NdFeB magnets. In the three months to June
30, Lynas produced 1,150t of NdPr, up from 846t during the
previous quarter. Production for the 2016 fiscal year totalled
3,897t of NdPr, up from 2,258t a year earlier. Sales volumes of
cerium and lanthanum have also strengthened, supported by
strong growth in the autocatalyst and UV cut glass markets.
The company said rare earth prices remain challenging and a
price recovery in the September quarter appears unlikely as
the market enters the low season for magnet production. The
firm's western competitors, US firm Molycorp and Canada's
Great Western, have in the past 12 months entered creditor
protection, leaving Lynas as the only large non-Chinese rare
earth producer surviving the current low prices.
Rare Earth Project Tracker
TREO
(mn t)
Production
(tREO/yr)
0.66
6,000
Madagascar Preliminary economic assessment completed (December 2014)
0.38
10,000
Australia
Jorc resource estimate (December 2014)
1.25
20,000
Nechalacho
Canada
Definitive feasibility study completed (October 2013)
0.25
4,600
Commerce Resources
Ashram
Canada
Preliminary economic assessment completed (July 2012)
-
16,850
Galileo Resources
Glenover
South Africa Preliminary economic assessment completed (March 2013)
0.05
-
Geomega Resources Inc.
Montviel
Canada
NI 43-101 resource estimate completed (June 2015)
2.67
-
Greenland Minerals
Kvanefjeld
Greenland
Definitive feasibility study completed (May 2015)
10.33
23,000
Hastings Rare Metals Ltd.
Yangibana
Australia
Independent scoping study completed (November 2014)
0.21
3,560
Hudson Resources Inc.
Sarfartoq
Greenland
Preliminary economic assessment completed (November 2011)
0.21
200,000
Matamec Exploration Inc.
Kipawa
Canada
Definitive feasibility study completed (October 2013)
0.10
3,650
Mkango Resources Ltd.
Songwe
Malawi
Pre-feasiblity study completed (December 2015)
0.40
2,800
Montero Mining & Exploration
Wigu Hill Twiga
Tanzania
NI 43-101 resource estimate completed (August 2011)
0.47
20,000
Namibia Rare Earths Inc.
Lofdal
Namibia
Preliminary economic assessment completed (October 2014)
0.01
1,500
Northern Minerals Ltd.
Browns Range
Australia
Definitive feasibility study completed (February 2015)
0.05
3,100
Peak Resources Ltd.
Ngualla
Tanzania
Pre-feasibility study completed (March 2014)
0.94
10,000
Pele Mountain Resources Inc.
Eco Ridge
Canada
NI 43-101 resource estimate completed (June 2013)
-
9,000
Quest Rare Minerals Ltd.
Strange Lake
Canada
Preliminary economic assessment completed (April 2014)
-
13,600
Rainbow Rare Earths Ltd.
Gakara
Burundi
Funding secured (April 2015)
0.14
2,500
Rare Element Resources Ltd.
Bear Lodge
USA
Pre-feasibility study completed (August 2015)
0.47
4,950
Tasman Metals Ltd.
Norra Karr
Sweden
Pre-feasibilty study completed (March 2015)
0.19
6,800
Ucore Rare Metals
Bokan Mountain
USA
Completes construction of RE pilot plant in Utah (March 2016)
221.00
2,250
Company
Mine
Country
Stage of Development
Alkane Resources
Dubbo Zirconia
Australia
Mining permit secured (December 2015)
Apphia/Tantalus
Tantalus
Arafura Resources Ltd.
Nolans Bore
Avalon Rare Metals
Copyright © 2016 Argus Media group
Licensed to: Xiaona Fan, Argus Media (Singapore)
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
| 10
Trade
Low rare earth prices continue to encourage stronger export
volumes from China relative to the same period 12 months
ago. China exported 23,213t of rare earths in the first half of
2016, up by 67pc from the 13,880t exported a year earlier,
China customs data show. Export revenues in January-June
totalled Yn1.11bn ($167.1mn), nudging up by 5.7pc from
Yn1.05bn a year earlier. But the average export price fell by
36.8pc year on year to Yn48,027/t because of sustained price
declines driven by ample supply and intensifying competition among suppliers. The large increase in export volumes
is mainly the result of a low base effect caused by a sharp
decline in exports in January-May last year after an announcement that export tariffs would be cancelled on 2 May
2015 created an incentive for exporters to postpone orders.
But lower prices have also encouraged importers to increase
buying this year.
China exported 7,024t of lanthanum oxide in the first half of
2016, up by 24.8pc compared with the same period of 2015.
Consumers from the ceramics and fluid catalytic cracking sector placed more orders this year, attracted by lower
prices. Export revenues totalled $13.21mn in January-June,
down by 35.8pc year on year because the average export
price was 48.6pc lower at $1.88/kg. Exports of lanthanum
oxide to the US were 4,590t in the first half of 2016, up by
32.2pc against the same months last year. Japan was the
second-largest importer of Chinese lanthanum oxide, receiving 885t in January-June.
Cerium oxide exports were 1,886t in January-June, up by
116.57pc compared with the first half of 2015, driven by
continuous increasing demand from Europe consumers and
lower prices. But the large year-on-year difference is a result
3,000
1,713
China's cerium carbonate exports totalled 2,375t in the first
half of 2016, up by 19.8pc from the first half of 2015 on the
low base effect. Export revenues totalled $3.2mn, down by
32.4pc on a year before, while the average export price of
$1.35/kg was down by 43.6pc compared with January-June
last year. Japan remained the largest buyer of Chinese cerium
carbonate, importing 1,876t in the first half of 2016, up by
39.09pc year on year. The US was the second-largest importer, with shipments of 366t.
China’s yttrium oxide exports were 866t in the first half of
2016, up by 23.52pc compared with 701t in the corresponding period of 2015 on lower prices and increased consumption from Japan, the US and Germany. Export revenue
totalled $5.28mn, down by 27pc from the same period last
year, while the average export price of $6.1/kg was down by
41pc from the year before. Japan was the largest importer of
Chinese yttrium oxide in the first half of 2016, with receipts
of 474t, up by 32pc against a year earlier. Imports from the
US increased to 126t, up by 43pc year on year, while Italy
imported 60t, down by 67.6pc year on year.
400
1,515 1,555
1,303
1,640 1,632
1,452
t
China’s monthly RE metal exports
500
2,675
2,161
2,000
Export revenue of $18.1mn in the first half of 2016 was up by
86.65pc year on year, and the average export price was down
by 13.82pc to $9.59/kg. The Netherlands was the largest importer of Chinese cerium oxide in the first half of 2016, with
receipts of 801t up by 117.27pc year on year. Italy was the
second-largest export destination, receiving 160t in JanuaryJune, up by 25pc year on year.
Exports of a group of unnamed rare earths, mostly erbium
t
China’s monthly RE oxide exports
of the low base effect.
1,831 1,828
1,582
1,706
437
359
381
371
330
328
309
297
300
206
220
204
Nov
Dec
268
194
200
1,000
100
0
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2016
Feb
Mar
Apr
May
Jun
— GTIS
Copyright © 2016 Argus Media group
Licensed to: Xiaona Fan, Argus Media (Singapore)
Jun
Jul
Aug
Sep
Oct
2016
Feb
Mar
Apr
May
Jun
— GTIS
Argus Rare Earths Monthly Outlook | Issue 16-08 Wednesday 3 August 2016
| 11
oxide, reached 2,553t in the first half of 2016, up by 52pc
from 1,677t in the same period last year as lower prices have
encouraged demand from Japan, South Korea and Vietnam.
Revenue from erbium oxide exports totalled $46.25mn in the
first half of 2016, down by 1.73pc from the year before. The
average export price of $18.12/kg was down by 35.45pc from
the same period last year. Japan was still the largest buyer of
Chinese erbium oxide, importing 1,210t, up by 55.3pc. South
Korea was the second-largest importer, with shipments of
532t, up by 180.8pc from the same period last year. Vietnam
imported 343t of erbium oxide, up by 53.7pc from the first
half of 2015.
China’s monthly neodymium oxide exports
In addition, dysprosium oxide exports were 35,442kg in the
first half of 2016, up by 440.8pc from a year earlier, driven by
higher demand from Japan and lower prices. China exported
17,056kg of terbium oxide in January-June, up by 10.1pc a
year earlier, as a result of decreasing prices.
industry have been trying to introduce financial tools to cope
with challenging market conditions and enhance China's
position in the global market. China contributes nearly 90pc
of global rare earth output.
Further down the supply chain, Chinese exports of rare
earth permanent magnets totalled 2,303t in May, a rise of
10.2pc on a year earlier. The average export price was $48/
kg, down by 17.4pc. In January-May China exported 10,370t
of rare earth permanent magnets, up by 7.8pc compared
with a year earlier. The average export price was $50.27/kg,
a drop of 15.3pc year on year. China produces over 80pc of
the world’s permanent magnets and consumes much of this
domestically. But export demand is rising thanks to the rapid
development of the new energy vehicle industry. And falling
prices for rare earth raw materials, such as metals and oxides,
have lowered the prices of permanent magnets, stimulating
exports. Rare earth magnets are used in the manufacture of
electric and hybrid vehicles, wind turbines and Maglev trains.
They are currently the key driver of global demand for rare
earths. Neodymium represents the largest rare earth component used in NdFeB magnets and its consumption within the
sector is subsequently the largest (67pc). Praseodymium is
also a prominent component (22pc) while dysprosium (5pc),
gadolinium (2pc) and terbium (0.2pc) are also utilised in far
smaller quantities.
China's state-controlled Baotou Rare Earth Products Exchange (REPE) has officially launched its new trading system.
The new system will combine spot trading, storage, quality
control, logistics, and financing into one platform, which
will effectively enhance the connection between rare earth
companies and banks. Participants in the Chinese rare earths
Copyright © 2016 Argus Media group
Licensed to: Xiaona Fan, Argus Media (Singapore)
t
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2016
Feb
Mar
Apr
May
Jun
Argus Rare Earths Monthly Outlook:
Data & Downloads Available
The Argus Rare Earths Monthly Outlook also features
downloadable market data published in spreadsheet
format, available only in Argus Direct.
Downloads include:
> All monthly outlook raw price forecast data
> Global new projects tracker (updated monthly)
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For more information, visit:
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| 12
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