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

BEIJING (Reuters) – Rare earth prices in China are set to surpass the record highs of several years following rumors that the official media announced that Beijing could strengthen its dominance over the minerals that are prized in its trade war with Washington .

Rare earths, a group of 17 elements appearing at low concentrations in the soil, are used in a wide range of products ranging from lasers to military equipment to magnets that are found in large electronics. public.

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

"(The rare earths related to magnets) are the ideal materials for the manufacture of weapons … because they are essential to high-demand, highly competitive and price-sensitive industries," said Ryan Castilloux , managing director of Adamas Intelligence, a consulting firm that tracks rare earth markets.

"(These rare earths) are collectively responsible for more than 90% of the value of the demand market each year … (so), they will produce as much juice as possible," Castilloux said by email from Toronto, adding that prices had been set at Continue to go up.

The prices of metal dysprosium, used in magnets, high-power lamps and nuclear control rods, are currently being evaluated by Asian Metal at their highest level since June 2015 at 2,025 yuan ($ 292.98) per kg. .

That's up nearly 14 percent from May 20, when Chinese President Xi Jinping visited a rare earth plant, suggesting that these materials could be the next front of the Canada-US trade war. -United.

(GRAPHIC: Rare earth export prices rise after China shook the sword of the trade war – tmsnrt.rs/2KjEK74)

The price of metallic neodymium, which is essential for the production of certain magnets used in engines and turbines, reached its highest level since last July, at 63.25 dollars per kg, an increase of about 30% since May 20, according to Asian Metal.

The price of gadolinium oxide, used in medical imaging devices and fuel cells, increased by 12.6% compared to May 20, to stand at 192,500 yuan per tonne, its highest level in five years.

Asian Metal is a research and reporting agency covering rare earth elements.

China's rare earth prices began to fluctuate "just after China announced the ban on importing rare earths from Myanmar," said Helen Lau, an analyst at Argonaut Securities in Hong Kong. .

On May 13, the state-owned Securities Times newspaper announced that the customs of Yunnan province (southwest) would ban from May 15 imports of rare earth from neighboring Myanmar, the main supplier of raw materials rare earths of medium to heavy weight.

"But a few days later you can see a big price movement – it's mainly because of this possible manufacture of weapons from rare earths," Lau said.

"If China actually arms rare earths, the United States will not have enough resources, because it takes time for it to have its own processing capacity, which is currently zero," he said. she adds.

Another analyst, who asked not to be identified because of the sensitivity of the issue, said that six major rare earth producers in China held the largest number of shares in the spot market, giving them on prices.

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