Supply glut pushes down rare-metal prices – by Hiroki Masuda (Nikkei Asian Review – August 14, 2019)

China’s possible policy shift on hybrid cars further dampens market sentiment

TOKYO — Prices for rare-earth metals are falling sharply, with the price of cobalt dropping 30% since the start of the year, and that for lithium remaining sluggish.

Global markets are swimming in rare earths, as production has outstripped demand for the batteries used to power electric vehicles. Speculation is rife that demand for the commodities will slow further as China considers promoting production of hybrid cars, which require fewer rare earths. This is further stifling market sentiment.

Cobalt and lithium are mainly used to make cathodes for lithium-ion batteries used in electric cars. Spot prices for cobalt in Europe are near three-year lows.

Benchmark lithium carbonate trades for around 70,500 yuan ($9,970) per ton in China, hitting its lowest point in over three and a half years and down 59% from its recent high in November 2017.

Demand for rare earths has grown rapidly since 2017, as markets foresaw increased demand for EV batteries. Supplies tightened due to speculative buying, causing prices to jump.

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