MISCH METAL MARKET OVERVIEW

From the late 1990s to the present, there have been significant changes in both supply and demand for individual rare earths. In the past year, prices for all elements except for europium (used in phosphors) have increased. Rechargeable NiMH batteries are the battery of choice for hybrid vehicles and the Global demand for hybrid-electric vehicles (HEVs) is expected to reach 3.9 million by 2015. If the number of NiMH batteries increased from the hybrid vehicles demand, then it could touch 20,000 metric tons of rare earth by the year 2010. Chinese Export Quota for Rare Earths has been reducing from 2004 in a considerable manner. For this Year, it has been cut by 22% by the government. This could create some imbalance in Global Rare Earths Market. Chinese consumption has risen from 40% to 36,000 metric tons REO (Rare Earths Oxide) in 2004 to 60% of 73,500 metric tons REO in 2007. This growth is due to a combination of production quotas, restrictions on foreign investment in the rare earths industry, export taxes and export quotas. In addition, China’s dominance over world supply which is currently 92% means it has significant influence on the future of the rare earth industry. Currently the substitution for Li ion batteries is NiMH batteries are minimal. Li batteries could replace NiMH batteries in future; this may bring down the demand for rare earths from this segment. Toyota’s Prius is the largest selling brand of hybrid vehicles in the world. Toyota is expected to produce 1 million hybrid vehicles in 2010. Moreover the total hybrid vehicles by the year 2012 are predicted to be around 3 million.