Outlook on Strategic Metals

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Update on Rare Earths

End of November Beijing published a list with 28 companies that have received export quotas for 2014. This proves that the previous WTO ruling has not caused the Chinese Government to put down their quota system. However, it is for the first time that an established company is suspended because of smuggling.

On the 10th of December Asian Metal reports that Baotou Customs broke a substantial rare earth smuggle case. Within 2 years over 130 t (corresponding to 2% of annual production) were supposed to be smuggled to mainly Vietnam. Many market participants expect that the increasing success by Chinese authorities will soon result in a rebound of prices.

Stockpiling

For some years already the economic powers in the Far East have continuously built strategic stockpiles of strategic materials. Metal Pages reported recently that in a first draft of the US’s National Defense Authorization Act for Fiscal Year 2014 (NDAA) a substan­tial stockpile of six critical materials is mentioned. This would also include rare earth oxides Yttrium and Dysprosium.

There are rumors that Chinese Government wants to buy 50 t of Gallium for strategic stockpiles in early 2014. This corresponds to ca. 15% of the annual global production! Apart from this Fanya Metal Exchange has bought bigger volumes of Gallium over the past few months. This could be interpreted as a sign for a soon turnaround of prices. Apparently both Chinese investors as well as Chinese Government react on the predicted growth rates that are expected for future Gallium consumption. Not to forget that Gal­lium price is still at the bottom for more than 6 months now.

Metal Pages reports these days that Indium is faced with a con­tinued investment buying on China‘s Fanya Metal Exchange. This indeed could be seen as a crucial factor to support continued price rises into 2014 given that production is basically outpacing end user demand.

On the 13th of December it is again Metal Pages to bring to our attention some major actions planned in Beijing. Apparently Chinese Government wants to buy 30 t of Germanium in the first quarter of 2014 for strategic stockpiles. This would account for one third of Chinese annual production!

Substitutes only possible to a limited extend

At regular intervals we hear of new substitutes or technological breakthroughs. However, a new study by Yale University found that 62 metals commonly found in technologies such as smart phones don‘t have better substitutes. And 12 (incl. Rhenium and Dysprosium) have no alternatives leaving high-tech industries vul­nerable to supply stocks. This indeed is in contradiction with the frequent claims made by industrial consumers. According to Yale University, substitutes often reduce the performance of a product. They also explain that technological breakthroughs often cannot be commercialized due to cost respectively availability of another critical material.

Future electro-mobility

The British market analysts from IDTechEX have published a study this December saying that the market for hybrid and electric vehicles will increase by 400% within the next 10 years. This should cause a significant demand for critical materials. On the one hand these are so-called magnetic metals like Dysprosium, Neodymium, Praseodymium and Terbium. On the other hand they also mention Gallium to replace conventional materials for use in high-performance super-capacitors.

If supply will not keep pace with the predicted growth in demand prices for these materials soon should start to rise again.

Swissmetal Inc.s´ “Defense & Aviation” contains Rhenium and Gallium, which makes it now accessible for private investors to purchase and profit from the increase in demand  over the years to come. Click here to contact Swissmetal for a free consultation on procurement & storage of this rare industrial metal.

Story Source: The above story was Published by Tradium-News in December 2013.