Are Rare Earth Metal Prices About To Rise?

Rare earth metal prices have fallen sharply since mid-2011, some declining by as much as 80% as expectations of rising supplies coincided with declining demand. More recently, prices have shown signs of stabilising. Chinese restrictions on mine output and plans to stockpile materials, coupled with the increased likelihood of problems at mines outside China may mean rare earth metal prices are about to rise.

China reduced its export quota for rare earth metal’s by 27% year on year to 10.5kt for first half 2012 in an effort to stabilise prices and preserve stock. Then, in August, under scrutiny from the World Trade Organisation (WTO) China announced a 2.7% increase in the annual export quota, the first rise in 5 years and the highest quota for 3 years. Although the Chinese export quota for the whole of 2012 is just over 30k tonnes, exports are likely to only amount to around half that amount.

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Cold November to provide short term boost to energy prices

The latest forecast from meteorologists WSI point to warmer than normal temperatures this winter (Nov-Jan) in western/northern Europe. Warmer than normal temperatures are likely to reduce demand for gas and oil for heating.

In the short term the UK may be an exception. The UK is forecast to see colder than normal temperatures in November, particularly early in the month.

UK gas prices (summer-13 contract) rose to their highest level since April following the reports publication. UK heating oil prices are currently around 61p per litre.

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Cooking oil prices to rise as Chinese seek ‘crush’ margins

Forecasts of a 25% hike in palm oil prices could support increased imports of soybean into China as farmers take advantage of the ‘crush margin’ to produce soya oil.

According to a report in Reuters, one of the largest palm oil producers Sime Darby Bhd. forecasts that palm oil prices may rise by almost one-quarter over the next eight months. Malaysia, the second biggest producer after Indonesia has announced a plan to cut taxes on exports while also abolishing the duty-free shipment quota from the start of 2013. These measures should help to reduce inventories, supporting higher palm oil prices.

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