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Chinese Stockpiling Around the CornerDate:2013-09-18

Monday September 2, 2013, 4:30am PDT
By Andrew Topf - Exclusive to Rare Earth Investing News

As the metals markets begin to wake up from their summer slumber, rare earth producers will be looking to the Chinese government for signals of its buying intentions for the rest of the year.

“Sources reported that related government agencies have finalised the goals for 2013′s rare earth stockpile buying,” Metal-Pages reported on Friday, noting that the total amount bought this year will be 10,000 tonnes.

The country began stockpiling rare earths for strategic reserves in 2012, Rare Earth Investing News reported, in a bid to address weak prices and to have a reserve for future shortfalls.

Meanwhile more rare earths from China, the world’s largest producer and consumer of rare metals, are making their way to export markets, with rare earth element (REE) exports rising 75 percent in July, the second highest monthly level this year. According to Proactive Investors, 1,778 tonnes were shipped from China in July, 10.4 percent more than in June.

Price update

Rare earth prices were mostly flat this past week, with the exception of terbium, which rose due to expectations of government stockpile buying, said Metal-Pages. Some suppliers were offering 4N terbium oxide for RMB 4,500/kg, with small deals being made for RMB 4,200 to RMB 4,300/kg.

Praseodymium/neodymium metal prices were steady at RMB 460,000 to RMB 470,000 a tonne, while oxide prices were in the range of RMB 360,000 to RMB 370,000 per tonne.

Prices of dysprosium oxide softened to between RMB 2,100 and RMB 2,150/kg, although those prices are still higher than the 1,950 to 2,000 renminbi range being offered in July.

Chinese prices for rare earths have firmed over the past couple of months due to a crackdown on illegal rare earth production by Chinese authorities. A spokesman for Baotou Steel Rare Earth (SSE:60001010), China’s largest REE producer, said in a conference call that the crackdown, combined with an increase in downstream demand, should improve rare earth prices in the second half of the year.

The company announced in July that it would halt production for six months at one of its ore processing facilities “in a bid to stabilize the market,” Global Times reported.

Stoppages at Chinese processing plants have become common over the last couple of years as rare earth companies in China seek to improve a weak pricing environment by restricting supply.

Company news

Arafura Resources (ASX:ARU) has started drilling a 1.8-kilometer trend about 500 meters from its Nolans Bore deposit in Australia’s Northern Territory. Highlights included 28 meters of 2.6 percent rare earth oxides (REO), and 23 meters of 1.8 percent REO. The company said recently it is targeting capital cost reductions of between AU$500 million and $1 billion on the project.

 

Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.

 

Tags: Arafura resources,  ASX:ARU,  China,  Rare Earth Articles,  rare earth prices