Electronics makers are worried about rising prices for rare earth materials amid growing demand and a heated relationship between the United States and China, the world’s most important source of these materials. For example, the cost of neodymium magnetic material used in speaker production has doubled since last year and in August this year was $ 117,300 per tonne.
Max Hsiao, senior manager of an audio equipment manufacturer based in Dongguan, says the rise in the cost of neodymium has reduced the company’s gross profit by at least 20%. Xiao says there are no prerequisites for the situation to return to normal in the foreseeable future. Neodymium and praseodymium are rare earth metals and are used to make permanent magnets for a variety of devices, from speakers and electric motors to medical devices and high-precision ammunition.
The geopolitical situation in the world only complicates the situation. China is the only country that has a complete supply chain for rare earths, from mining to processing. Last year, the Celestial Empire controlled 55% of the world’s production capacity and 85% of the total processing of rare earth elements. In January, Beijing hinted that it could impose tighter controls on their exports, leading to higher prices.
The cost of neodymium oxide, a key resource for electric motors and wind turbines, rose 21.1%. Holmium, which is used in magnets for sensors and mechanisms, has risen in price by almost 50% this year.
Washington accuses Beijing of using control over rare earth materials to exert political pressure, saying China limited their exports to Japan in 2010 and 2011 due to a territorial dispute between states.
Prices for more widely used metals such as tin, copper, aluminum and steel, which China also has a big influence on, also rose from last year. It is reported that the price of tin has almost doubled compared to last year. Analysts believe that China’s control over the supply of rare earths and other metals could give it the ability to resist US pressure on geopolitical issues.
The first to feel the impact of rising prices for rare earths are likely to be small and medium-sized electronic component manufacturers, as they are unlikely to pass all costs on to their global customers such as HP, Apple, Samsung and other major automakers.
At the same time, the rise in the price of rare earth metals is facilitated not only by the tense political situation between the United States and China, but also by the growing demand for these materials. For example, their wider use is required by the design of new models of electric vehicles, as well as products with support for 5G.