Chinese rare earth prices hit 20-month high

Chinese rare earth prices jumped to their highest in 20 months, as mining suspension in major producer Myanmar sparked stockpiling ahead of the peak consumption season, analysts said on Thursday.

Prices of dysprosium oxide leapt to 2,610 yuan ($356) per kilogramme on Wednesday, the highest since May 2022, latest data provided by Shanghai Metals Market (SMM) on LSEG Eikon showed.

Terbium oxide prices rose to 8,600 yuan a kilogramme, a level unseen since July 3.

Mines in Myanmar’s Pangwa region in Kachin State, the country’s biggest source of rare earth, have been closed from Monday in preparation for inspections during Sept. 6-7, consultancy SMM said in a report on Thursday.

“A local miner said they have not resumed production and are waiting for a notice on the next step from the inspection team,” said Yang Jiawen, an analyst at SMM.

Rare earth is a prized group of 17 minerals used in consumer electronics and military equipment.

Myanmar accounted for 38% of rare earth imports into China in January-July, Chinese trade data showed, while the Southeast Asian country was the fourth biggest source of rare earth mining in 2022, data by the U.S. Geological Survey showed.

A local resident in the town of Chipwi told Reuters she saw workers from nearby Pangwa coming to her town as mining activities have been paused.

Chinese processors are expecting one to three weeks of disruption of Myanmar feedstock supply, which is unlikely to impact the supply demand balance for 2023, said analyst David Merriman at Project Blue.

However, Merriman expected short-term upward pricing movements due to uncertainty and suppliers holding back material in anticipation of higher prices.

“Any extended shutdown of mining in Kachin could be quite damaging for Chinese refineries in Southern China which are reliant upon feedstock from Myanmar, though the increase in imports from Laos could relieve this somewhat,” Merriman added.

Some rare earth consumers are stockpiling cargoes for use during China’s Sept. 29 – Oct. 6 public holiday, fearing higher prices which are also boosted by expectation of better demand in peak consuming months of September and October, SMM’s Yang said.

Worry of possible supply disruptions amid environmental inspections in late August in Jiangxi province, one of China’s major rare earth production hubs, also added to the price hike, she added.

China’s imports of rare earths surged 76% year-on-year to 12,673 metric tons in August, and volumes in the first eight months jumped 54.4% to 118,426 tons, Chinese trade data showed.