The rare earth prices have fallen sharply in recent months. What did the burglary mean for you?
Thomas Grob: Many investors are holding back to await bottoming. Only sporadically do investors act counter-cyclically and use the current price level as a start or simply to cheapen their positions. But also the outflow to industrial consumers has stalled. Because even the industry covers only the short-term needs for months. Inventory storage is currently taboo for the vast majority of industrial customers.
Are you convinced that we have reached the lows?
Rough: We still see downward movements, although there are now signs of a trend reversal. Further price developments will also largely depend on what happens in China. In November, the 4 market leaders withdrew their plants in droves, significantly reducing the official supply of rare earths. In addition, the Chinese government has decided to build strategic reserves on a large scale. However, there are still large amounts of contraband that enters the market. China has taken various measures in the past few months to combat illegal mining and smuggling of goods. As soon as these measures take effect, prices will inevitably turn again. Because only these days has Metal Pagesreports that last year the share of illegal exports exceeded legal exports by about 20%. As a result, this means that the actual amount exported was nearly 35% higher than the government released total.
Which of the technology metals do you currently find interesting?
Rough: Here are certainly a number of metals to call. Gallium, for example, looks back on a rapid price decline. However, this is due to an anticipation of future increases in demand. As a result, new capacities were built up and utilized to a large extent, even though the processing industry is still lagging behind. This gives the investor a great opportunity to buy gallium at prices that are in the range of cost. Given the current price level, producers will inevitably consider temporarily withdrawing assets from the grid.
Also germanium is currently very interesting. Here, China, as the world's largest producer these days, has decided to deprive 2014 of 20 t of market growth by March to build strategic reserves. This corresponds to approx. 15% of the world annual production from the year 2011.
Does politics specifically target price policy?
Rough: Indirectly, China certainly intervenes in the pricing policy. The measures mentioned above, but also the quota policy that has been established for many years, confirm this. However, China also has a big responsibility. It is certainly in everyone's interest for China to fight illegal mining, but the primitive production methods used here cause considerable damage to the environment. On the other hand, it is quite understandable that China is interested in the sustainability of the natural resources available there and, moreover, wants to make the best possible use of the available resources.
The interview with Thomas Grob was conducted by Sebastian Dürnagel of Value Relations GmbH.
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