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The Price of Neodymium – Another drop?

In our last exciting report on the Price of Neodymium it looked like the price per kg of the Rare Earth magnet material had stabilized in the upper 80’s.  Another 6 months have gone by and what has happened?

neodymum1.15Well, looks like it took another hit. The price dropped suddenly in November and hasn’t recovered. In fact it seems to have dipped a bit more in December.

What happened? It may be hard to tell, some articles point (indirectly) to how China’s efforts to restrict the export of rare earth magnets may have backfired on them as they now possess an overabundance of production and markets reducing as hybrid cars reduce their rare-earth usage and the US is set to restrict the usage of rare earth magnets in toys.

Another factor might be the global drop in oil prices, which have resulted in reduced costs across the board.

Will this continue? It is hard to say. One source states that China is continuing to restrict their market production while expressing concern about their drop in the market share. We’re scientists, not market experts, so we cannot say for certain.

Neodymium magnets are used in stereo loudspeakers, TV’s, turbine systems,  car parts, science instruments, and even smartphones.


The Price of Neodymium – Are we stable?

It has been 9 months since we did an article on the price of Rare Earth Magnet material, Neodymium. At that time to price was doing see-saws from 75 to 105 in price per kg: 163

So what has gone on those past 9 months? Not a whole lot, actually. Have a look at the latest movement:

Neodymium7.17Now it may look like there are some dramatic drops in price there if you look closely at the scale you will note the price variations are only $2 per kg. That makes the movement on the chart much less varied than the $30/kg variations it was experiencing last year around this time.

Has anything happened to cause this? Not much that we can determine. Mexico is considering adding itself to the list of Neodymium producers, but this is recent and does not seem to have done much to the price. Demand for electronics has not exactly spiked nor crashed. It may simply be that the wildcat speculators have left the market after making their profits or losing their shirts. The resulting market may simply be a more natural one without the roller-coaster effect speculation can bring.




The Price of Rare Earth Neodymium Magnets – Up, Down, Up Down.

So it was less than a few months ago that we discussed the price of Neodymium. Since that time the price continued to fall (it was shown reaching down to 150 $/kg in the graph in that post). So what has the price of Neodymium done since then? Well it seems to be….bouncing.

163 From 150$/kg at the bottom of the last graph the price seemed to continue to drop down to 90 all the way to about 75$/kg. Then it started rising again in the mid-summer. Then just a couple of weeks ago the prices started to fall again. So what happened? Apparently the price rise was based on speculation that a very large order from China’s State Reserver Bureau was in the works, but fell through. China is also experiencing some economic woes in their commodities markets.

Another factor is that other nations besides China have been working on their own Neodymium production. Russia invested heavily this year on rare-earth production to prevent dependence on China’s output. In the US the National Strategic and Critical Minerals Act was passed which is designed to speed up approval of mining operations.

All of these actions are in response to China’s heavy restriction on Neodymiums over the past year that caused a massive upsurge in Neodymium price before it crashed. It is hard to tell if China was flexing its economic muscles and is now paying the price, or if it was legitimately trying to control mining production and pollution issues but ended up stinging the world market.

It is also possible that Neodymium may continue simple rises and falls like any marketplace commodity, no longer rock-bottom but also no longer with sky-high prices.



The Price of Rare Earth Neodymium Magnet Prices – A small bubble bursts?

At the beginning of this year China, which controls that vast majority of Neodymium production in the world, decided to centralize production. They put taxes on the product to pay for pollution controls (mining and refining can be a messy business) they also controlled exports in order to utilize the magnets for their own ends. This caused a quite a stir as prices skyrocketed and manufacturers of toys and other magnet using products found their materials costs rising rapidly. Many vendors informed us of price increases 2-3 times this year where in past years there may have been just one set of price changes. It also threatened the price of hybrid cars, which use at least a kilogram of Neodymium.

But a few months ago, we noted that the price of Neodymium leveled off. It hindsight it should have been fairly obvious – prices can’t increase 100% every month. We went on the assumption that the prices might drop a little bit but would likely remain high as domestic production of Neodymium ramped up and dropping prices might discourage such investments, and China had little reason to change its present policies.

China Prices Have Dropped But Still Remain High

However, there were other factors in Neodymium pricing at play. These factors have resulted in a bit of a price crash over the past month. While the price out of China remains high, it has come down quite a bit. But the Bloomberg Rare Earth Metals index has actually dropped below last year’s levels!


There are apparently several reasons for this crash. One is speculation – whenever a commodity rises fast in price there are inevitably economic speculators  who jump into a buying spree and hold the product hoping to get as much re-sale out of it. This can be quite profitable, but if you join at the wrong time you can get caught in a crash or bursting bubble of prices. It seems that this happened to a lot of speculators when the demand dropped.

And why did the demand drop? Well, high prices discouraged a lot of casual use of high-power magnets, but Toyota was working on a rare-earth free induction motor in response to China’s 2010 restrictions. Other car companies plan to use such motors in their hybrids as well.

Prices are still high compared to the incredibly low prices of 2008-2009 when Chinese


production was at a high point and prices at a low point – this is the era when rare earth magnets started to be used in toys! But at least the era of rapidly skyrocketing prices of rare earth magnets would seem to be over for now.


Neodymium, Rare Earth Magnets, Part 2 – Price Levelling Out

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.

Graph courtesy of Metal-Pages.com

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.


Neodymium, The Rare Earth Magnet, and its Price.

Neodymium is the 60th element on the periodic table and the primary material for high-power, Rare-Earth Magnets. These Neodymium magnets have about ten times the power of regular ferrite magnets.

  Of late, however, Neodymium has been undergoing some rather abrupt pricing changes. In the past, it was a moderately expensive element, which kept high power magnets on the pricey side. But once China’s mining industry and production capabilities came up to speed, the price dropped dramatically and soon China had a lock on the mining market. Most domestic neodymium mining closed down.

Neodymium is not rare, it is found all throughout the Earth’s crust. But finding deposits worth mining can be tricky. China soon reduced exporting neodymium to develop their magnet industry. This  meant that while getting raw neodymium was difficult, cheap rare-earth magnets were soon widely available. Rare-earth magnets become so affordable that they are almost like toys. In fact, many toys do employ neodymium magnets and would not work with normal magnets. Neodymium also pops up in other ways: high power remote-control toys use motors with neodymium magnets. Neodymium is also used in many high capacity batteries, and power generating windmills require them for the highest output.

But of late there have been issues with magnet supply – we’re not running out – but China kept Neodymium prices under heavy control while their magnet industry developed. At the beginning of this year, China loosened those price controls. As a result the price of neodymium skyrocketed – as much as quintupled since the year began.

Local vendors tried to keep their prices down as long as they could, but they could not absorb price increase after price increase. In the past month alone Spectrum Scientifics has gotten three notifications from vendors that product prices would be increasing as the magnets in them became more expensive.

Will this sort itself out? It is hard to say and at Spectrum we are science-lovers, not miners or economists. Some have cried ‘Peak Neodymium!’ over the price increases but other assure us that there are deposits all around the world, but then another element needed for Neodymium magnets, Dysprosium, becomes a factor as there are very few deposits to mine. Solutions may be found but at present the industry is lagging.

Sadly, this does mean some toys we sell at Spectrum Scientifics will go up in price, as will a lot of other things. Did you know a Toyota Prius needs almost a kilogram of Neodymium?

Update: See more developments on the price of Neodymium