Prices for the vital industrial minerals known as rare earths appear to have moderated in recent weeks following two years of relentless gains, as the supply outlook brightens and dominant producer China faces possible legal challenges to export restrictions.
Rare earths—shorthand for a collection of 17 minerals used to make products from hybrid-car batteries and oil-refining agents to military equipment—have been surging, with the prices of some rising more than tenfold since 2009 amid panic buying. China controls almost the entire global supply, and its export limits, mine restructurings and other policies have sparked a frantic scramble to secure the obscure metals.
On Tuesday, a J.P. Morgan Chase & Co. analyst cited falling rare-earth prices as a reason to slash his outlook for Colorado-based Molycorp Inc., a rare-earths producer often considered an industry bellwether. Its New York Stock Exchange-listed shares subsequently tumbled nearly 22%. The shares fell another 3.9% Wednesday, ending at $39.85.
Speaking on Capitol Hill Wednesday, Molycorp Chief Executive Mark Smith said, “Although there may some some short-term fluctuations and impact related to recent speculation in China, we remain very, very bullish on the prices of these materials.”
Rare-earth prices remain far above where they were just two years ago. Lanthanum, for instance, still hovers 18 times above its 2009 price, while prices for cerium are still nearly 25 times higher, according to Lynas. Indeed, some international prices haven’t fallen at all, in particular those that are known as heavy rare earths, like terbium, which is used in advanced lasers and optics.