Rare earth prices are out of this world
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China's export of rare earth metals burst through the $100,000-a-ton mark for the first time in February. That's an almost ninefold increase from a year before, while the volume of trade stayed far below historical averages.
China's quota policy on rare earths, which are used in a wide range of hardware including precision-guided weapons, hybrid car batteries and iPads, has forced prices up dramatically since July last year, when each ton fetched a mere $14,405 on average.
The apparent price rises have averaged $10,000 monthly for each ton. They accelerated in February, galloping ahead by $34,000 for each ton, according to Reuters calculations based on data from China's Customs office.
Last month each ton of exports was valued at $109,036, including the cost of insurance and freight, almost half as much again as the average value in January.
The explosion in export values has coincided with a collapse in volumes coming out of China - the source of almost all the world's rare earth supplies - which has cut export quotas of the 17 rare earth metals and raised tariffs on exports.
China's actions have infuriated its trading partners but lifted the shares of the few mining and prospecting companies outside the country. Those include the US miner Molycorp Inc, Canada's Rare Element Resources Ltd and Neo Material Technologies Inc, and Australia's Arafura Resources Ltd and Lynas Corp.
However, the companies' share prices have been under pressure this month because Japan's earthquake and tsunami are expected to temporarily slash demand from China. In February, 281 tons of Chinese exports went to Japan, with a value of $38.9 million.
China exported a total of 750 tons in February, slightly more than the 647 tons shipped in January but otherwise the lowest monthly volume since February 2009, when demand was hit by the global financial crisis.
China's Customs office changed its method of presenting rare earths exports in its headline data this year, boosting the reported volume by including products made from rare earth metals. By that method, exports were 2,976 tons in February, up by 132 percent from a year before, when the figure did not include rare earth products.
