The lanthanides group consisting of 15 elements ranging between atomic numbers 57-71, Scandium and Yttrium are collectively called rare earth metals. Cerium, Erbium, Europium, Gadolinium, Holmium, Lanthanum, Neodymium, Praseodymium, Promethium, Samarium, Scandium, Terbium, Thulium and Ytterbium are the elements included in the lanthanide series. Scandium found in most of the rare earth element deposits is also considered a rare earth metal.
These metals are an important part of many electronic devices ranging from computers to smartphones, cameras, DVDs and memory devices. Also, these are used in a wide range of industries, including automotive, glass and ceramic products. Rare earth metals are used to produce rechargeable batteries used in cell phones, laptops, and several other portable electronic devices. These metals are also used as raw materials in electronic displays for computer monitors, television screens and smartphones. Neodymium, scandium, cerium and lanthanum are the major rare earth metals in production and consumption globally.
Market Dynamics
Divers
- Elevated usage in direct-drive turbines for wind energy production
- Rise of new production capacities coupled with Increased demand for electric vehicles
Restraints
- Demand-supply outages and the rise of substitutable materials
- Long realization period and uncertain investment environment
Market Trends
Rare earth compounds of yttrium, terbium, cerium and gadolinium are used as phosphors in various electronic appliances such as LEDs and smartphones. These rare earth compounds exhibit electro-phosphorescence, wherein an electric discharge in the compounds results in color variations. In addition to the above, these elements are also used in energy-efficient lighting and magnetic refrigeration. The global smartphone market declined 1% YoY in CY 2019. This is the first time that the smartphone market has declined for two consecutive years. However, the decline was slower than in 2018 (4% YoY), and the smartphone market actually grew 3% YoY in Q4 2019.
Growing demand for high-tech and green technologies will increase the demand for rare earth elements for the foreseeable future. Changing market drivers could stabilize and even increase rare earth market prices for high-demand compounds. Additional uses for more abundant REEs are still needed.
Geographical Analysis
Asia Pacific is growing at the fastest CAGR of 9.8% during the forecast period (2020-2027).
China dominated the Asia Pacific rare earth elements market with the highest revenue share of 69% in the year 2019. Rare earth supply is dominated by Chinese producers, which accounted for approximately 80% of global supply in 2019. However, total dependence on Chinese domestic supply has been reducing since 2015 with increased external supply from Malaysia, the USA, Russia, Vietnam and India.
Chinese rare earth production in 2019 was 127,000 tons of total rare earth oxide (TREO), equating to 25,000 tons of NdPr oxide with the total global supply at 37,000 tons. To meet projected demand in 2030, the global supply for NdPr oxide needs to expand by 61,000 tons. China will continue to dominate global markets, strengthen its supply chain, and increase rare earth use in e-mobility with expected strong growth for NdPr oxide in Neodymium Iron Boron (NdFeB) magnets used in electric vehicle (EV) traction motors. Moreover, China, the world’s largest automotive producer, is majorly focusing on increasing electric vehicles' production and sale in the country. For this purpose, the country has planned to increase electric vehicle production (EVs) to 2 million a year, by 2020 and 7 million a year, by 2025.
Moreover, China has the world’s largest electronics production base. The country serves not only domestic demand for electronics but also exports electronic output to other countries. With an increase in the disposable income of the middle-class population in the country and increasing demand for electronic products in the countries importing electronic products from China, the production of electronics is projected to grow, contributing to rare earth elements market growth as rare earth elements are mainly used in the manufacturing of electronics products for domestic and export markets.
In 2018, China's rare earth oxide imports reached about 41,400 tons, increasing by over 100% YOY. Meanwhile, the domestic production of rare earth oxides shrank as China combated illegal rare earth production. China's rare earth imports are mainly minerals and chemical concentrates from Myanmar and the United States. In 2018, China imported about 26,000 tons of rare earth carbonates from Myanmar, which accounted for about 25% of domestic demand. The heavy rare earth from Myanmar accounted for nearly one-third of domestic consumption.
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