Weapon of choice? China rare earth prices soar on their potential role in trade war

BEIJING (Reuters) – Chinese rare earth prices are set to climb further beyond multi-year highs hit following a flurry of state media reports that Beijing could weaponize its supply-dominance of the prized minerals in its trade war with Washington.

Workers transport soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province, China October 31, 2010. REUTERS/Stringer

Rare earths, a group of 17 elements that appear in low concentrations in the ground, are used in a wide-range of products stretching from lasers and military equipment to magnets found in consumer electronics.

China supplied 80% of the rare earths imported by the United States from 2014 to 2017, with Chinese state newspapers last month reporting Beijing could use that as leverage in the ongoing trade dispute between the two.

“(Magnet-related rare earths) are the ideal materials to weaponize … because they are so critical to high-demand, highly-competitive, price-sensitive industries,” said Ryan Castilloux, managing director of Adamas Intelligence, a consultancy that tracks rare earths markets.

“(Such rare earths) are collectively responsible for over 90% of the demand market’s value each year … (so they) will yield the most juice for the squeeze,” Castilloux said by email from Toronto, adding that prices were set to keep rising.

Prices of dysprosium metal, used in magnets, high-powered lamps and nuclear control rods, are currently assessed by Asian Metal at their highest since June 2015 at 2,025 yuan ($292.98) per kg.

That is up nearly 14 percent from May 20, the day Chinese President Xi Jinping visited a rare earth plant, sparking speculation the materials could be the next front in the Sino-U.S. trade war.

(GRAPHIC: Rare earth export prices perk up after China rattles trade war saber – tmsnrt.rs/2KjEK74)

The price of neodymium metal, critical to the production of some magnets used in motors and turbines, has risen to its highest since last July at $63.25 a kg, up about 30% since May 20, according to Asian Metal.

The price of gadolinium oxide, used in medical imaging devices and fuel cells, is up 12.6 percent from May 20 at 192,500 yuan a tonne, the highest in five years.

Asian Metal is a research and price reporting agency that covers rare earth elements.

Chinese rare earth prices started to move “right after China announced the import ban” on rare earths from Myanmar, said Helen Lau, an analyst at Argonaut Securities in Hong Kong.

The state-run Securities Times reported on May 13 that customs in the southwestern province of Yunnan would ban imports of rare earths from neighboring Myanmar, a key supplier of middle-heavy rare earth feedstock, from May 15.

“But then a couple of days later, you can see a big movement in the prices – so that was mainly because of this possible weaponizing of rare earths,” Lau said.

“If China indeed weaponizes rare earths, the U.S. will not have enough supply because it needs some lead time to build their own processing capacity, which currently is zero,” she added.

Another analyst, who asked not to be identified due to the sensitivity of the matter, said that six major rare earth producers in China held the most stocks in the spot market, giving them power over prices.

The six major producers are China Minmetals Rare Earth Co, Chinalco Rare Earth & Metals Co, Guangdong Rising Nonferrous, China Northern Rare Earth Group, China Southern Rare Earth Group and Xiamen Tungsten.

Reporting by Tom Daly and Shivani Singh; Editing by Joseph Radford

Source link

more recommended stories

  • Trump says U.S. would tax French wine in response to digital tax

    U.S. President Donald Trump speaks with.

  • App looks to get tips from coffee drinkers to Colombia growers

    BOGOTA (Reuters) – An app that.

  • U.S. House lawmakers ask regulators to scrutinize bank cloud providers

    WASHINGTON (Reuters) – Two U.S. lawmakers.

  • VMware to pay $5 billion for firms offering cloud security, developers platform

    (Reuters) – VMware Inc said on.

  • Volkswagen not interested in buying Tesla stake

    FILE PHOTO: Volkswagen AG CEO Dr..

  • Splunk to buy cloud software firm SignalFx in $1 billion deal

    (Reuters) – Data analytics software maker.

  • Ahead of G7 summit, Macron presses U.S. to help reform taxes on big tech

    FILE PHOTO: French President Emmanuel Macron.

  • Citigroup, BNP caught up in U.S. case against Huawei CFO: documents

    NEW YORK (Reuters) – U.S.-based Citigroup.

  • Intel unveils first artificial intelligence chip Springhill

    FILE PHOTO: Computer chip maker Intel’s.

  • Chinese smartphone maker Xiaomi posts 15% rise in sales, misses estimates

    FILE PHOTO: Xiaomi branding is seen.

  • Sony to buy ‘Spider-Man’ developer Insomniac Games

    FILE PHOTO: The logo of Sony.

  • U.S. grants Huawei another 90 days to buy from American suppliers

    WASHINGTON (Reuters) – The United States.

  • Shell debuts electric vehicle chargers in Singapore, first in Southeast Asia

    FILE PHOTO – A sign is.

  • Exclusive: U.S. set to give Huawei another 90 days to buy from American suppliers – sources

    SINGAPORE/WASHINGTON (Reuters) – The U.S. Commerce.

  • Alibaba and the $15 billion question: Amid Hong Kong’s protests, when to list?

    HONG KONG (Reuters) – Hong Kong’s.

  • Exclusive: U.S. to extend Huawei’s partial reprieve on supply curbs – sources

    SINGAPORE/WASHINGTON (Reuters) – The U.S. Commerce.

  • China’s Ninebot unveils scooters that drive themselves to charging stations

    BEIJING/HONG KONG (Reuters) – Segway-Ninebot Group,.

  • Amazon.com defeats IRS appeal in U.S. tax dispute

    (Reuters) – Amazon.com Inc on Friday.

  • Rental firm walks away from Tesla order after quality dispute

    FRANKFURT (Reuters) – Car rental company.

  • STAR Market tech board offers hope to Chinese venture capitalists

    SHANGHAI/HONG KONG (Reuters) – When Chinese.

  • Nvidia revenue tops expectations on strength in video gaming, auto units

    (Reuters) – Nvidia Corp’s quarterly revenue.

  • Online spending helps UK retail sales grow unexpectedly in July

    LONDON (Reuters) – British retail sales.

  • China’s Lenovo first-quarter profit more than doubles on record PC market share

    (Reuters) – Chinese PC maker Lenovo.

  • FCC chairman circulates order to approve Sprint, T-Mobile tie-up

    FILE PHOTO: A smartphone with Sprint.

  • U.S. aviation regulator bans select MacBook Pro laptops from flights

    FILE PHOTO: Apple company logos are.

  • Facebook paid contractors to transcribe users’ audio: Bloomberg

    FILE PHOTO: Attendees walk past a.

  • Exclusive: Google’s jobs search draws antitrust complaints from rivals

    BRUSSELS/SAN FRANCISCO (Reuters) – Google’s fast-growing.

  • Colombia fines Uber more than $629,000 for obstructing regulatory visit

    BOGOTA (Reuters) – Colombia’s commerce regulator.

  • Deliveroo quits Germany to focus on other markets

    FILE PHOTO: A biker wearing a.

  • Russia tells Google not to advertise ‘illegal’ events after election protests

    MOSCOW (Reuters) – Russia’s state communications.

  • Tesla electric car catches fire after hitting tow truck in Moscow

    Joe Young, media relations associate for.

  • China to push to attract more high-tech manufacturers

    FILE PHOTO: Employees work at a.