Due to buoyant sales and uncertainty oversupply from Myanmar, the prices of rare earths required for electric vehicles (EVs), will continue to rise this year.
The Chinese price of praseodymium-neodymium alloy used to make super-strong magnets used in EV motors doubled last year and has already shot up more than 10% so far in 2022 to 1.17 million yuan ($184,072) per tonne.
China’s industry ministry met with automakers and battery firms last month to discuss the rising prices of rare earths.
Ryan Castilloux, consultant Adamas Intelligence said that “the situation is as tight as it has ever been.”
“The industry operates hand-to-mouth and demand keeps growing month after month.” He refused to provide price forecasts due to their volatility.
China is the largest producer of rare earths in the world. This group of 17 minerals is used in EVs and wind turbines. However, China relies on Myanmar for approximately half its heavy rare earth feedstock.
After the closure of a critical border crossing to stop the spread of the novel coronavirus, the country’s imports of rare earth from Myanmar were stopped for several months.
Analysts said that although the border was reopened in November, political instability in Myanmar following a military coup last January adds to uncertainty oversupply.
Castilloux stated that the industry is still fragile politically and in the health aspect. This should be cause for concern.
Permanent magnets made of rare earths are used in most motors that power EVs. This sector has seen a boom in sales as automakers look to cut carbon emissions.
According to the International Energy Agency, global sales of EVs increased more than twice in 2021 to 6.6million, nearly tripling their market share compared to two years ago.
Gary Gao, data provider Shanghai Metals Market stated that they expect rare earth prices to remain strong through at least 2025.
He stated that policymakers in China believe the current price of REE (rare earth element) oxides is undervalued.
China recognized strong demand and increased its 2022 quotas to domestic rare earth mining production by 20%
