Rare earths got a spotlight this that’s more often reserved for steel, renewables and other more flashy metals courtesy of CBS News’ “60 Minutes.
Response has been mostly positive and the monthly Rare Earths MMI® registered a value of 29 in April, an increase of 3.6% from 28 in March. More importantly, shares of the only US-based Rare Earths producer, Colo.-based Molycorp Inc (NYSE:MCP), shot up as soon as the report aired.
Hype vs. Hope
Is this a sustainable trend? The trace metals that make up the rare earths group are not any more abundant or in demand than they were a few weeks and we’re still not clear on exactly what China lifting its rare earth export quota system actually even means.
Why all of the concern, all of a sudden, for yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium? We have documented, several times, that despite China’s market dominance there is not yet a shortage of the elements that are used in everything from cell phones to fighter jets.
My colleague, Lisa Reisman, rightfully pointed out this month that, “the underlying supply and demand fundamentals create absolutely no business case for the private sector to behave any differently. As long as heavy rare earths continue to flow from China (we are talking about the following metals: yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium) at a ‘not break the bank’ price, the private sector remains content with the status quo.”