Low supply, firmer demand support China’s Dy, Tb prices

China's dysprosium and terbium prices have increased significantly over the past several weeks, supported by limited spot availability and a rise in buying interest following consecutive rises in the country's output and sales of new energy vehicles (NEVs).

The terbium market has maintained its upward track since mid-October, hitting more than an eight-year high, bolstered by tightening spot availability and firmer consumer demand. Prices for 99.99pc terbium oxide were assessed higher at 6,150-6,200 yuan/kg ($934-942/kg) ex-works today from Yn4,800-4,850/kg ex-works in mid-October, when prices fell from Yn4,950-5,000/kg ex-works on 27 August following consecutive rises since late July.

Renewed demand from major rare earth and downstream metal processing plants, along with reduced spot supplies, prompted suppliers to raise dysprosium prices. The range for 99.5pc dysprosium oxide was assessed higher at Yn1,890-1,920/kg ex-works today, up from the 15 October assessment of Yn1,620-1,640/kg ex-works after slumping from a year-to-date high of Yn1,930-1,950/kg ex-works on 29 June.

Spot supply tightens Spot supply shortages have provided upside potential to domestic spot prices in the past month, with most suppliers with inventories withholding material from spot sales and halting quotes for new deals.

The dysprosium market has been rising significantly since late last week, after large rare earth plants announced plans to buy 99.5pc dysprosium oxide at around Yn1,780/kg and further raised their purchase prices to Yn1,880/kg earlier this week.

A Jiangxi-based trading firm bought 1t of dysprosium oxide at Yn1,800/kg ex-works earlier this week and recently stopped offering material because of a steep rise in domestic spot prices, following renewed purchases by large-scale rare earth plants and metal processing manufacturers. The firm received offers as high as 1,920/kg ex-works for 99.5pc dysprosium oxide recently, with deals for small volumes reported at Yn1,910/kg.

A rare earth metal processing plant – also based in Jiangxi province, the country's largest production hub for medium and heavy rare earths – is reluctant to make offers for new sales as it is focusing on fulfilling contracts signed earlier this month. Its production has also been booked until January 2021 following a gradual recovery in the magnet manufacturing industry from the impact of the Covid-19 pandemic.

Continued supply tightness in the terbium market and increased buying interest from the high-end magnet sector have boosted terbium prices, with trading firms with limited inventories reluctant to sell material and large-scale producers eager to make spot purchases on expectations of a further rise in spot prices.

Buyers are finding it difficult to secure 99.99pc terbium oxide below Yn6,200/kg after a small deal was reported at Yn6,150-6,200/kg, as large producers are holding the most terbium oxide supplies and are reluctant to sell the material in the spot market.

Prices are projected to rise further in the near term if the supply tightness persists in the near term, according to market participants.

Domestic, overseas magnet demand recovers An expected increase in domestic magnet output and rising magnet exports to Asia-Pacific have supported consumption and pushed up domestic prices for rare earth feedstock, according to market participants.

The magnet manufacturing industry has been supported by rapid developments in the automobile and offshore wind turbine industries, which make up more than 60pc of total magnet consumption.

Market participants forecast that domestic neodymium-iron-boron (NdFeB) output will exceed 190,000t this year, up by more than 5pc from a year earlier, with NdFeB production to rise further to 260,000t by the end of 2025. The estimated higher output comes as stimulus packages are offered by the Chinese government and other countries to accelerate the development of renewable energy resources as part of efforts to achieve net-zero emissions targets.

China's exports of rare earth permanent magnetic materials increased from a month and year earlier on a continued recovery in downstream demand from most Asia-Pacific countries.

China exported 3,210t of rare earth permanent magnets in October, up by 3pc from 3,095t a year earlier and higher by 2pc from 3,133t in September, according to customs data. The higher shipments reflected a rise in export demand from international customers, following the easing of the Covid-19 pandemic in some countries.

China's deliveries during January-October slipped by only 0.4pc from a year earlier to 28,773t as gains in exports to Asia-Pacific countries more than offset a fall in shipments to European countries, where further lockdown measures are being imposed to halt the spread of Covid-19.

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