Rare Earths Supply Deficit Peaking, To Surplus By 2013 -Goldman
May 04 2011 - 9:23PM
Dow Jones News
A global deficit in supply of rare earth elements is likely to
peak this year before moving into surplus by 2013, according to
Goldman Sachs analysts.
In a research note Thursday, analyst Malcolm Southwood said the
world was likely to see a deficit of 18,734 metric tons of the
metals this year, equivalent to 13.2% of demand, before slipping
into a surplus in 2013 which will rise to 5,860 tons the following
year, or 3.2% of projected demand.
However, prices will likely continue to rise, the bank said. "We
envisage that the market for rare earths will remain in severe
deficit in 2011 and 2012, and that prices will trend higher over
the next 18 months. We envisage a closely balanced market in 2013,
and modest surpluses thereafter--at least, for some of the more
abundant light rare earths--with some price softening in the
2013-2015 period."
Prices for rare earths have jumped sharply since last July as
China, which accounts for around 90% of global production of the
elements, has clamped down on export quotas and illegal
production.
The basket price of rare earths in Lynas Corp. (LYC.AU) Mount
Weld deposit was last recorded at $162.66 per kilogram on May 2,
compared to an average of $10.32/kilogram throughout 2009.
Goldman said that Chinese output would fall 2.5% this year and
resume growth in 2012, as a campaign to cut down on illicit
production and improve environmental records reached its
conclusion.
Rare earths are a suite of 17 elements with diverse uses from
high-powered magnets and fuel refining to energy-efficient light
bulbs and mobile phone screens.
-By David Fickling, Dow Jones Newswires; +61 2 8272 4689;
david.fickling@dowjones.com
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