SUZHOU - Rare earth quotas in China, which the world's top producer uses to control supply, are set to rise at a much slower rate this year amid a supply glut, industry participants said on Wednesday.
Rare earths are a group of 17 elements used in products as varied as lasers, military equipment, magnets for electric vehicles, wind turbines and consumer electronics.
China issues mining, smelting and separation quotas annually, typically twice in a year, with 2023 seeing a rare issuance of three batches of quotas.
The quotas are closely monitored by market participants as an indicator of supply.
The mining output quota in 2024 is estimated at 270,000 metric tons, said Chen Zhanheng, vice secretary general at the Association of China Rare Earth Industry, at an industry conference.
That represents a year-on-year rise of nearly 6% from the total mining quota at 255 000 tons in 2023, when the annual growth rate was 21.4%.
Yang Jiawen, an analyst at consultancy Shanghai Metals Market, forecast the total mining output quota this year to rise to 280 000 t, a rise of 9.8% from 2023.
The 2024 rare earth smelting and separation quota is expected at 254,000 tons, Chen said, a rise of 4.2% from 2023 when the quota grew 20.7% year-on-year.
Beijing in early February unveiled its first rare earths mining quota in 2024 stood at 135 000 t, 12.5% higher than its first quota of 2023. And the rise is smaller than the 19% year-on-year increase seen in the first quota released in 2023.
"The volumes for the second quota this year will be key and it won't be an easy choice to make for policymakers as the market has yet to shrug off a supply glut because of weaker-than-expected demand so far this year," said an East China-based market insider, requesting anonymity as he is not authorised to speak to the media.
"If the total quota this year is rising at a similar growing pace as 2023, prices will feel more downward pressure."
In the first four months of 2024, China shipped out 18,049.5 tons of rare earths, a year-on-year increase of 10%.