Rare earth supply expected to be further reduced due to more instability factors

State-owned enterprise Baotou Steel (Group) Co., Ltd. controls 60% of China's rare earth supply. According to the Baogang Daily released on October 31: In the third quarter of this year, Baogang Rare Earth achieved operating revenue of 4.111 billion yuan, an increase of 2.06 times year-on-year. Baogang Rare Earth stated that the significant year-on-year increase in rare earth product prices during the reporting period was the main reason for the substantial year-on-year growth in Baogang Rare Earth's operating revenue and profits in the third quarter. However, foreign media reported that Baogang plans to halt rare earth production for one month.

Rare earth prices began to soar sharply from the beginning of this year, with increases generally ranging from 10 times, but reversed starting in mid-July of this year and then continued to decline. Baogang's one-month production halt is expected to drive rare earth prices up again and is also expected to reduce the amount of rare earths in the global market by 5,000 tons.

Rare earth shortage will seriously affect the fluorescent lamp market

GE Lighting recently announced that the price of lanthanum (a rare earth element), an important component of energy-saving lamps, has increased by 2000% since the beginning of the year. Therefore, production restrictions will not help ease the price surge, costs will continue to fluctuate, and profit margins in this sector will continue to be squeezed.

Phil Marshall, President and CEO of GE Lighting, said: "I don't think rare earth prices will fall back to normal levels before 2013. Even though U.S. mines are expected to be ready to supply rare earth metals, the problem will still remain."