Rare earth metals consultants TRU Group said on Monday that recent attempts by Chinese suppliers to stem sharp declines in prices since the third quarter of 2011 is "likely to fail."
The consultants held this view "even though the latest February export data for rare earth oxides prices strengthened to $144,000 per t-REO, up significantly over the January figure." It is also worth noting that export prices in 2012 are still more than triple the average for 2010.
"Predicting how far prices will fall and when price-stability will return to the market is complex," says Edward Anderson, President of TRU. "This is a small niche market, not a situation of supply-demand balance alone," and to complicate things further the shortages are "artificial."
Anderson added that "western REE projects in the pipeline would not only alleviate supply shortages but also have a direct effect dragging down prices. estimated production costs per t-REO are small compared to market prices and product contribution margins strikingly high. Uncertainty in the rare earth price outlook remains a compelling risk factor for new REE projects."
