Mixed Outlook Expected for Rare Earth Elements
The rare earth elements industry reportedly has stabilized in 2016.
The rare earth elements industry reportedly has stabilized in 2016, according to Roskill, following a prolonged period of falling prices brought about by oversupply and falling demand in some key applications. Reaction by major Chinese producers and the closure of Molycorp’s Mountain Pass mine in 2015 has reduced oversupply in the industry. Rising demand for rare earth permanent-magnets has created opportunities for manufacturers to expand, which, with further demand increases forecast, opens up prospects for rare earth companies throughout the supply chain.
Demand for rare earths in permanent magnet applications has increased by 4% per year since 2011, representing 23% of the total rare earth demand in 2016. This is forecast to increase to approximately 28% in 2020, before falling again by 2026. Catalysts, metallurgical and ceramics applications are all expected to remain major end uses of rare earths, particularly cerium and lanthanum, throughout the forecast period, with combined demand growth rates of over 4% per year through to 2026.
China continues to dominate production of rare earth elements, representing 88% of global supply in 2016. However, the industry landscape has changed in recent years as a result of ongoing restructuring and consolidation of the Chinese domestic industry and heavy emphasis placed on tackling illegal production by the Chinese state government. Increasingly stringent environmental permitting, the closure of excess capacity, and continued production quotas have resulted in Chinese rare earth supply reaching its lowest level for 13 years in 2016.
Rare earth production outside of China fell in 2016, with no output from Molycorp’s Mountain Pass mine. Growing mine production in Russia, India and Brazil is expected to lead rest-of-world supply increases in 2017. A number of rest-of-world rare earth projects are scheduled to begin commercial production by 2026, which could reduce the global dependency on Chinese rare earth products.
The outlook for rare earth demand in key end-use applications is mixed, with some rare earths forecast to show significant increases in demand while others are expected to decline further. Since the start of the decade, there has been significant interest in the use of rare earth permanent magnets, largely produced in China and Japan, in electric vehicles and renewable energy products, which has accelerated since 2015.
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