Earthquake did not affect rare earth market rare earth prices continue to soar

According to reports, China's rare earth exports in the first two months of 2011 amounted to 7,084 tons. This was only a 0.3% increase over the first two months of 2010, but it already accounted for about half of Beijing's allowable exports in the first half of 2011. At present, the average price of rare earth metals is 44,361 US dollars per ton, which is nearly doubled from the average price of 23,603 US dollars last year. It is also several times the price in the first two months of 2010. The average price of eight rare earth metals tracked by Lynas Corp. of Australia rose Monday by 91% from the end of last year. Hong Kong Economic Herald News released statistics obtained from the General Administration of Customs of China.

China's statistics highlight Beijing's policy of tightening control over rare earths as a strategic industry and continue to trigger a warming up of rare earths in the market. Rare earth is a generic term for 17 minerals and is used in technologies from mobile phones to military equipment. China controls more than 95% of the global production of rare earths, and the limited supply has triggered global competition for rare earths.

However, the disaster in Japan has become another major concern of the rare earth industry. Rare earths are used in various products produced by Japan, the third largest economy in the world, including automobiles. Ruthenium is used in automotive glass, ruthenium in batteries, and ruthenium in electronic components. Continued factory closures in Japan may reduce Japan's demand for rare earths. In recent years, Japan has purchased large quantities of rare earths, reflecting its fear that Beijing’s policies may render some materials unavailable.

The earthquake in Japan has led to a drop in the share prices of some exploration companies, reflecting investors' concern that any disruption in Japanese demand will hurt the price of rare earths, making it more difficult for rare earth mines that are already at high risk to obtain funds.

In 2010, the share price of major mining companies soared. Since then, before the earthquake, the stock market has been adjusted: US producer Molycorp Inc.’s share price has fallen by about 10% this year, while Lynas has fallen by 2.9%. However, China's large-scale producer, Shanghai-listed Baotou Steel Rare Earth's share price has risen by about 17%.