China’s largest rare earths producer, Baotou, has suspended production for one month in an effort to prop up falling prices, in the clearest signal yet that Chinese producers are intent on supporting prices at high levels, reported the Financial Times.
Rare earths prices have been sliding since their peak in July, but the slide has accelerated during the past week, the Times reported.
According to China Daily, Baotou Steel Rare Earth said in a statement filed with the Shanghai Stock Exchange that the company would stop raw materials supply for its smelting and separation units "in order to balance the supply and demand of rare earths."
China is the primary source of the 17 metals classified as rare earths.
With 95 percent of the supply in their hands, that nation possesses a substantial amount of power over the market. This latest announcement is yet another display of how that power can be used.
Foreign governments cried foul after Beijing imposed tougher export restrictions on domestic producers, cutting off supplies and driving up global prices, Reuters reported.
China has used a strategy of making rare earths significantly cheaper on the domestic market than those sold for export to lure businesses within their borders.
Michael Silver, chief executive of American Elements, told Reuters that “now they are requesting them to make their end-user products in China and requesting them to transfer valuable technology to other companies so they can benefit from that knowledge, particularly in green technology, solar power and the automotive industry."
The Financial Times also noted that traders have complained since last year that Chinese customs officials were forcing contracts to be rewritten to conform with a “secret list” of acceptably high rare earths prices, but that had less influence on the market during a time when prices were uniformly going up.
Baotou's production suspension is the second time in recent weeks that Baotou has tried to prop up prices, after very publicly purchasing neodymium at above-market prices last month, the Times reported.
© 2024 Newsmax Finance. All rights reserved.