Lynas Sees Lanthanum Demand Rising 4 Percent a Year Until 2020

MetalMiner reported that Lynas Corporation Ltd. (ASX:LYC) believes that demand for lanthanum will rise by 4 percent annually until 2020. That optimism has led the company to sign several contracts that will see buyers pay higher prices for Lynas’ material than for Chinese material.

According to Lynas, those buyers are fine with paying more because they want to support “sustainable pricing.” However:

‘A lot of [US buyers] can smell blood in the water; they know the cerium and lanthanum markets are oversupplied,’ [Asian Metal rare earths analyst Zachary] Schumacher said. ‘I struggle to see where these buyers are buying enough volume that there’s even a debate about [sourcing from] Chinese vs. non-Chinese suppliers.’ In other words, there’s no reason to pay more for the sake of paying more, especially for comparable-quality material.

The only case Lynas would have, according to Schumacher, is in the realm of extremely high-purity lanthanum, for which the largest lanthanum end-use market in the US – the FCC (fluid catalytic cracking) sector – doesn’t even have a need.

US buyers (big ones such as BASF, and even smaller ones) can easily access the Chinese market and negotiate to buy greater volumes at lower prices; and Chinese suppliers are more than willing to part with their supply. Indeed, US traders such as PIDC and Blue Line buy up tons of material from China in year-end ‘closeouts’ before the next quota, according to Schumacher. So for most buyers, there’s plenty of cheap and easily accessible lanthanum floating around.

Click here to read the full MetalMiner report.