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Growing Operating Rates at Downstream Producers Push Rare Earth Prices Up in JulyDate:2013-08-08

SHANGHAI, Aug. 7 (SMM) –

Economy
Industrial production in the UK edged up 1.1% MoM and 1.2% YoY in June, capping forecasts.

Germany saw a 3.8% MoM growth and 3.4% YoY increase in its June factory orders, a significant improvement from the 1.3% MoM decline and 2% YoY contraction in May.

The Reserve Bank of Australia announced a 25 basis point cut in interest rate to 2.5%, stating the interest rate cut will help balance the economic growth. The country’s trade surplus fell to AUD 602 million in June from AUD 670 million.

LME Metals
Despite better-than-expected industrial data from the UK and Germany, LME base metals prices fell back after hitting high. This is because investors pulled out of the market before China announces key economic indicators on Thursday and Friday.

LME copper and tin were the outliers among base metals. LME three-month copper closed at USD 6,997/mt, up 0.1%, while LME tin finished 0.13% higher at USD 21,275/mt. LME aluminum shed 0.97% to close at USD 1,786.5/mt. LME lead lost 1.12% at USD 2,106.3/mt. LME zinc ended the day down 0.88% at USD 1,853/mt. LME nickel trimmed 0.7% to finish at USD 13,774/mt.  

Growing Operating Rates at Downstream Producers Push Rare Earth Prices Up in July
China saw a big rally in rare earth prices in July. Dysprosium-iron alloy prices surged 79.31%, dysprosium oxide prices jumped 78.57%, and didymium oxide prices gained 25.93%.

The government of Ganzhou began to crack down on illegal rare earth mining in its jurisdiction in late June. This drove traders to stockpile rare earth, pushing prices up. Meanwhile, falling profits also deterred illegal mining. 

A pickup in demand also contributed to rising rare earth prices. Demand from auto, air conditioner and electronics sectors will remain stable over the next few months, allowing operating rates at rare earth downstream producers to grow to 70% from 30% in the second half of last year.

Tags: China rare earth prices in July