Chinese rare earths have seen their prices fall since April as international players find alternative buyers.
The shortage of iron ore production in Australia and Brazil has caused global iron ore prices to rise by about 50 percent compared to last year. However, the price of rare earths produced in China has been falling since April as international players have found alternative buyers. (By Qiao Long/Liu Shaofeng)
In the last two months, international iron ore prices have been negatively affected by the relationship between China and Australia, as well as the reduction in production, which has seen its prices rise to new highs. 2020, iron ore at 700 or 800 yuan per tonne, rose to more than 1,200 yuan today, an increase of nearly 50%.
There is an opinion that, in terms of the macro environment in Australia, with the epidemic under control, companies in various countries are recovering their production capacity and demand for steel is increasing. However, as the main exporting countries of iron ore, Australia and Brazil have insufficient capacity. Among them, in the first quarter of this year, Brazil’s Vale iron ore production was 68.045 million tons, 19.5% less than the fourth quarter of last year
On the other hand, the demand for iron ore has surged. In an interview with Radio Free Asia on Tuesday (18), Feng Chongyi, a professor of China studies at the University of Technology Sydney, Australia, said that developed countries such as Japan, Europe and the United States have resumed production and demand for iron ore has increased, resulting in an imbalance between supply and demand.
Feng Chongyi said: because their economic activities basically recovered, the demand for this area has returned. But Brazil, a major exporter of iron ore, has not resumed exports, and none of his companies can resume processing iron ore. Iron ore prices are influenced by supply and demand.
However, at a time when iron ore prices are soaring, the prices of rare earths and related products, in which China’s exports are dominant, are falling. The price of neodymium oxide, one of the most used rare earth products, for example, has reportedly fallen from a high of nearly 700,000 RMB per ton since March to more than 500,000 RMB today.
Scholar Feng Chongyi pointed out that although China has abundant rare earth resources, when she uses rare earths as a strategic material to hold foreign countries hostage, they will choose to import rare earths from other countries and the price of rare earths in China will fall.
Feng Chongyi said: the high cost of production of rare earths, Australia and other countries do not go to deliberately produce rare earths, but because China uses rare earths as a weapon against the West, after activating Australia and other countries on this market to replenish up. Developed countries have found alternative sources of goods to China, so China’s rare earths have instead lifted a stone to smash their own feet.
Chinese financial scholar Commander recognized to this station that the price of Australian iron ore exports and China’s rare earths price trend, forming the opposite trend, the reason for which is worth reflecting.
The commander said: A full reflection should be made on this, and even the Chinese government should pay great attention to it. Although China’s rare earth industry occupies half of the world’s rare earth field, but most of these enterprises are mountainous, the number of enterprises, are small but not strong, and the quality of products is relatively poor.
At present, the four major mines in Brazil and Australia monopolize more than half of the world’s iron ore. 2020, China imported a total of 1.17 billion tons of iron ore, of which 700 million tons came from Australia. However, when it comes to rare earths, in which China has a competitive advantage, there are no large enterprises operating.
According to the U.S. Geological Survey 2015, the world’s rare earth reserves are 130 million tons, and China’s reserves are 55 million tons, ranking first in the world.
Although China has almost monopolized the world’s heavy rare earths, it has no say in the price. The annual turnover of Baotou Rare Earth Exchange, a national trading platform, is only 1.33 billion RMB, about 0.3 million tons. In contrast, in 2020, the market size of rare earths in China reaches 19.5 billion RMB, with a total production of 140,000 tons. The annual turnover of Baotou Rare Earth Exchange only accounts for less than 3% of China’s rare earth production.
On March 1 this year, Chinese Minister of Industry and Information Technology Xiao Yaqing said at a press conference at the State Information Office that China’s rare earths were not sold at the price of “rare” but at the price of “earth”.
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