As we noted in our previous blog entry on the price of Neodymium the cost of Neodymium has skyrocketed this year due to a combination of increased taxing in China, restrictions on exports, and other causes. It has had a bit of an effect on casual use of Neodymium magnets as toys – the very popular BuckyBalls, for example is facing its second price increase this year alone. The manufacturer is reacting to the price increases by producing a lower cost product with fewer magnets.
The ‘good’ news is that is seems the price of Neodymium may be leveling out.
That of course is somewhat bittersweet news. This leveling out has taken place after the price has increased 3x-6x-fold depending on how you measure.
Will the price go down? Hard to say and we are lovers of science, not economists. We can say that there are signs that companies in countries outside of China are a little tired of China having such a monopoly and are taking matters into their own hands and starting mining and production facilities. We are taking these developments as a sign that prices are expected to remain significantly higher than they used to be in the recent past for the long term. Otherwise such dollar investment in production would be a dangerous play if this were a bursting price bubble. China says they plan to use the new tax towards new pollution controls, and has little reason to ease its export restrictions after just a few months. Domestic companies’ production efforts are unlikely to cause a bubble burst as they will not be producing rare-earth magnets to glut-inducing levels.
One other thing to consider is that despite these massive recent increases, Rare-Earth magnets are still much cheaper now than they were in the past. A glance at a science catalog from the year 2000 (before Chinese production really ramped up) shows that a 1″ disc magnet cost $13.95! A comparable product after the recent price increases only costs just $5.99. In another comparison, a 1″ disc made of Samarium Cobalt (another type of rare earth used for magnets – less powerful but able to resist high temperatures) cost nearly $50 in 2000.
Neodymium (Rare-Earth) magnets are many times more powerful than regular magnets. They are not only used in toys, but also in hard-drives, hybrid automobiles, and a host of other devices in our everyday life.