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Global Rare Earth Market Forecast to Reach Nearly $2 Billion By 2007, Says BCC Research
March 7, 2003 |Estimated reading time: 2 minutes
Norwalk, Conn. -- According to a soon-to-be-released updated report from Business Communications Co. Inc., RGB-118U Rare Earths: Worldwide Markets, Applications, Technology, the global rare earth market was estimated at 78,205 metric tons in 2002, valued at $1.6 billion.
By 2007, the demand is expected to increase 3.2 percent per year on average, reaching 91,465 metric tons. At that time, the global rare earth business will be valued at $1.98 billion. The segments providing the most dynamic growth include electronics, magnets and glass and ceramics, segments that are all tied in with consumer electronics and appliances, markets expected to recover in the next upswing.
The global rare earth industry has undergone some significant structural changes and has been facing a difficult operating environment in recent years of oversupply and a price war that emerged in late 2001. Output and sales volumes are down as well. Conditions appear to have reached a trough and a better environment is expected to emerge, although price wars have resulted in some prices falling more than 40 percent. This has placed extreme pressure on margins, forcing a number of inefficient producers into bankruptcy and leaving most of the rest operating at very low levels. Inventories are lean, however, suggesting that a pick-up in demand will quickly result in a larger volume of orders. Finally, a sustained global economic recovery is expected to emerge in 2003. Price pressure will continue to be a problem and industry consolidation during 2003 and 2004, especially in China, is likely.
World markets are expected to be very competitive and China will remain the world's largest rare-earth supplier. Economic growth in a number of developing countries will provide new and potentially large markets in Southeast Asia and Central/Eastern Europe. The most rapid growth in rare earth demand will occur in East Asia.
Major competitors include Baotou Iron and Steel, owners of the Baiyunebo rare earth mining operations, and the dominant player. A few other organizations are intermediate processors and have obtained strong positions. These include China Rare Earth, AMR Technologies, and Rhodia. Molycorp is a long-standing producer but has reduced its presence. Plagued by overcapacity and low pricing, consolidation of the industry is in the making, especially so in China, where a large number of organizations exist. Many of these are undercapitalized.
The use of rare earths, especially in automotive catalysts, permanent magnet, and rechargeable batteries is expected to continue to increase as future demand for automobiles, computers, consumer electronics and portable devices increases. Global rare-earth markets are expected to necessitate greater amounts of higher purity mixed and separated rare earth products to meet this growing demand. Strong demand for cerium and neodymium in automotive catalytic converters and permanent magnets is expected to continue during the next five years. Future demand growth is expected for rare earths in rechargeable Ni-MH batteries, medical applications, sensors, and dental/surgical lasers. Magnetic refrigeration will also emerge as a commercial market. Fiber optics will begin to recover by mid-decade.
For more information on Business Communications Co. Inc., visit www.bccresearch.com.