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Rare earth metals market strong as global EV fleet hits record levels, supply tightens - report

Kitco News

Welcome to Kitco News' 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.

(Kitco News) - According to Adamas Intelligence, a consulting company specializing in strategic metals and minerals, in November 2021, the market saw record NdFeB magnet, motor power and motor unit deployment onto roads in all newly sold passenger EVs globally.

Further upstream, China's minerals concentrate imports surged to record levels in November, temporarily quelling oxide and metal price gains in December.

However, the consultancy said that magnet rare earth materials prices have resumed their relentless rise in 2022 reaching highs not seen for a decade.

"With the Chinese holiday season approaching, rare earth suppliers continue to push prices up as the demand side of the hand-to-mouth market looks to replenish stocks in advance of mid-month shipping company shutdowns," the authors of the report noted.

Looking forward, the consultancy expects a wide range of scenarios that could playout in 2022 although at this time it sees more impetus for ongoing strong prices (and potentially another price rally) than for a sharp reversal.

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Importantly, Adamas pointed out that on the supply side, 2022 will be a transitional year as MP Materials ramps up domestic processing.

"We see potential for the availability of light rare earth feedstocks (and oxides) in China to grow increasingly tight in the months ahead should there be a swift reduction in U.S. exports to China and an insufficient increase in Chinese domestic production to compensate," the consultancy said.

Similarly, with the coup in Myanmar persisting, there's ongoing potential for returning supply disruptions that would further tighten availability of heavy rare earth concentrates in China, sending oxide prices even higher, Adamas concluded.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.