Rare earths - China lifts export restrictions in complete surprise!
As late as last December, Beijing vigorously defended 2010's officially declared export quotas for rare earths for environmental reasons, despite the fact that 2013 had already been declared inadmissible by the WTO. All the greater was the surprise when the Chinese government announced at the beginning of the week that it would renounce the controversial export restrictions in the future in order to reduce its influence on the economy. In fact, however, the rebuking of the regime may have had other reasons.
Artificial shortage classic own goal!
Because ultimately, the artificial shortage turned out to be a classic own goal. Immediately after the introduction of regimentation, the price of rare earths rose so much because of the monopoly position of the Middle Kingdom that the high-tech companies in the established industrialized countries increasingly substituted Rare Elements with other raw materials. The resulting decline in demand resulted in a historic decline in the price of metals with unpronounceable names, which resulted in the export value of 2014 being one third below that of the previous year, even though ten percent more rare earths were exported.
Tax instead of ban!
Since, due to the lower demand, no significant recovery of the rare earth prices is to be expected until further notice, experts suspect that China will introduce export taxes in the foreseeable future. In this way, exports could also be controlled much better. All in all, the bottom line is that the market will continue to be adequately supplied in the future, so that at best Rare Earth shares are worth considering for gamblers.
Marc Nitzsche is editor-in-chief of the commodity trader Börsenbriefs. The stock market letter is a specialist in commodities and offers concrete buy recommendations with analyzes and price forecasts. More information at: www.rohstoff-trader.de
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