To use all functions of this page, please activate cookies in your browser.
With an accout for my.chemeurope.com you can always see everything at a glance – and you can configure your own website and individual newsletter.
- My watch list
- My saved searches
- My saved topics
- My newsletter
Rare earths: The price pressure is abating, but the high cost is still a major hurdle
26-07-2012: The price spiral of the 17 rare earth elements has slowly been losing momentum. But prices remain high – a problem mainly for high-tech companies. High prices are a problem particularly for suppliers of magnets for e-mobility and wind turbines, LED lamp makers and providers of batteries and catalytic converters for cars. But half of these enterprises have already set up task forces dedicated to designing strategies to secure the supply of these raw materials. According to the results of the recent Roland Berger Strategy Consultants study "The Rare Earth Challenge", most of the companies surveyed consider it most important to achieve a balanced strategy mix.
"The rapid increase in prices for rare earths has proven a burden to the profitability of many companies, and even threatened the existence of some," explains Thomas Rinn, Partner at Roland Berger Strategy Consultants. "Even though the prices have fallen since mid-2011, this issue still has top priority in the companies, because the supply situation remains critical, especially regarding heavy rare earths. Companies have to take the right actions to ensure that they remain able to produce competitively in the future."
The supply of raw materials is a matter for top management
Last year, the world's industry consumed around 137,000 tonnes of rare earths – predominantly to manufacture high-tech products such as permanent magnets for wind turbines and electric automobiles, LED lamps, catalytic converters and batteries for the automotive industry. The rising industrial demand and China's monopoly position as main supplier are driving the prices of this commodity upward. So in 60% of the surveyed companies, the supply of raw materials is a top-management issue.
"Half of the affected companies have already set up a task force to secure the supply of raw materials at competitive prices," says Sebastian Durst, Project Manager at Roland Berger Strategy Consultants. "The main thing is to develop and implement strategies that optimize the company's own product costs."
The strategy mix is what counts
Companies are taking a wide range of different measures to counteract the high commodity prices. More than 90% of those surveyed are securing a reliable supply chain for themselves: They are negotiating new agreements with their suppliers or looking for alternative ones. 84% of the survey participants are trying to reduce their consumption of rare earths: They are using other materials in their production or trying to improve their material efficiency. More than half of the companies pass the additional costs of rare earths on to their customers.
"But more and more companies are sounding out alternative options, such as cooperating with other companies. Some are even looking at moving their production to China, because that is where the majority of rare earths are extracted, and the prices are correspondingly lower there," says Rinn.
"In general, companies where production is heavily reliant on rare earths are basing their plans on a balanced mixture of activities. That is the only way they can protect themselves from massive price increases and remain competitive," Durst concludes. This is an important aspect, as most participants in the study expect prices for heavy rare earths to continue to rise in the future. Only the prices for light rare earths are expected to remain stable or perhaps even fall slightly.
Contact / Request information
Request further information free of charge:
This is where you can add this news to your personal favourites
- rare earths
- Roland Berger Strategy…
- 1Drew Industrial Division of Ashland Specialty Chemical Company purchases industrial water-treatment business of London-based Fer
- 2Allegra® Launched in Japan
- 3LG-DOW Polycarbonate Plant Starts Production in Korea to Effectively Meet Regional Needs
- 4Honeywell Appoints Terrence Hahn as Vice President and General Manager for Fluorine Products
- 5Putting electronic cigarettes to the test
- 6Caflon® surfactants from Univar as substitutes for banned nonylphenol ethoxylates
- 7Not just cars, but living organisms need antifreeze to survive
- 8Plurafac LF 303 - Plurafac LF 305: The new generation of low-foam surfactants
- 9Knoll AG: Pharma business sold for $6.9 billion:
- 10Fluor Corporation's Henry Kister Honored by Chemical Engineering Magazine
- BASF strengthens its enzyme technology footprint
- Membrane elements from LANXESS approved for drinking water applications
- Evonik selects OPX Biotechnologies for joint development of bio-based chemicals
- ZEISS presents half-year financial figures
- Merck wants to achieve 2014 goals already this year following a successful start