Page 348 - 2021 White Paper
P. 348
1 White Paper on the Business Environment in China
stimulus would go into infrastructure. In July 2020, coronavirus pandemic, prompting governments and
China imported a record 112.65 million metric tons buyers to look for alternative sources. There was
of iron ore, a rise of 24% from 2019 and up 10.8% significant disruption to rare earth refinery output
from the previous month. China imported 11.8% in February 2020 with closures at facilities extending
more iron ore in the first seven months of the year from the Lunar New Year and into late February and
as compared with the same period in 2019. China early March. The main issue for rare earth supply
also produced a record amount of crude steel in chains has been the distribution and transport
July. Bulk commodities continue to benefit from of raw materials and finished products. Delays to
infrastructure investment in China. Steel production shipments of products to consumers domestically in
has been surprisingly strong and improving steel China and internationally filter through the supply
mill margins should keep the output resilient in the chain, causing some product shortages. For rare
short term. A depleted iron ore stockpile also helps earth magnets, there is an agreement that domestic
(Tan). consumers are being preferentially supplied over
international customers, though this is likely more
Thus, the coronavirus pandemic is putting China to do with the fact that many [rare earth] magnet
on course to dominate global steel production to an producers in China are integrated beyond magnet
even greater extent than before, accelerating a trend manufacturing and are consuming magnet materials
that has gathered pace for more than half a century. internally rather than supplying them for export. The
In April, a locked-down UK produced less than half refined neodymium-compound supply became very
of 1%of the world’s steel, according to estimates tight in 2020 and markets for other magnetic rare
from the World Steel Association. China, on the earths, such as dysprosium compounds, remained
other hand, produced 62% — dwarfing every other under pressure. Initial concerns shifted from
country combined, and significantly above its 54% whether China would be able to continue to supply
share a year earlier. The country has long coveted rare earths as the coronavirus spread to concerns
the status of top producer. In the late 1950s, at the about western demand just as lockdowns came into
launch of China’s Great Leap Forward, Chairman force in Europe and the US. As a result, the overall
Mao pledged to overtake Britain in steel and other market remained relatively balanced since the world
industrial production within 15 years, and by 1996 got the rare earths it needed at the end of 2019 in
it had pulled clear of the rest of the pack. But this anticipation of the Lunar New Year holiday season
recent surge is a sign of Beijing’s determination to before demand crumpled. Going into the outbreak,
fend off the impact of global economic weakness. the supply-demand balance was much tighter for
While steel mills fell quieter in Europe, the US and dysprosium and terbium in particular than it was for
India, Chinese producers kept running through its the light rare earths. Shutdowns consumed a lot of
Covid crisis and are producing at an even faster the material that was floating around in the market,
rate than they did in 2019. Production of the metal and price hikes reflected that. But with that said,
is an important indicator for an otherwise opaque the neodymium-praseodymium market doesn't
set of government policies, which draw on an array operate with a lot of overhang either. An upward
of state-controlled or state-influenced sectors to lift momentum behind those two light rare earths was
output (Hume). created as demand started to come back in Europe
and in North America (Woodall).
Rare Earth Elements
China's goal for rare earth development is to
There are 17 rare earth metals, the lanthanide form a new pattern for industry with a reasonable
series of elements and two others with similar development pace, orderly production quotas,
properties, scandium and yttrium. Rare earth efficient utilization, scientific and technological
elements are vital to most modern electronic products innovation and coordinated development with high-
including electric vehicles, wind turbines, and a end manufacturing. As China is keen to push the
range of military technologies. China's stranglehold industry to enter the development stage with high-
on rare earth metals and their supply chains has end applications and higher value-added products,
been highlighted by the disruption wrought by the the government is gradually giving full play to the
strategic value of rare-earth applications to upgrade
348
stimulus would go into infrastructure. In July 2020, coronavirus pandemic, prompting governments and
China imported a record 112.65 million metric tons buyers to look for alternative sources. There was
of iron ore, a rise of 24% from 2019 and up 10.8% significant disruption to rare earth refinery output
from the previous month. China imported 11.8% in February 2020 with closures at facilities extending
more iron ore in the first seven months of the year from the Lunar New Year and into late February and
as compared with the same period in 2019. China early March. The main issue for rare earth supply
also produced a record amount of crude steel in chains has been the distribution and transport
July. Bulk commodities continue to benefit from of raw materials and finished products. Delays to
infrastructure investment in China. Steel production shipments of products to consumers domestically in
has been surprisingly strong and improving steel China and internationally filter through the supply
mill margins should keep the output resilient in the chain, causing some product shortages. For rare
short term. A depleted iron ore stockpile also helps earth magnets, there is an agreement that domestic
(Tan). consumers are being preferentially supplied over
international customers, though this is likely more
Thus, the coronavirus pandemic is putting China to do with the fact that many [rare earth] magnet
on course to dominate global steel production to an producers in China are integrated beyond magnet
even greater extent than before, accelerating a trend manufacturing and are consuming magnet materials
that has gathered pace for more than half a century. internally rather than supplying them for export. The
In April, a locked-down UK produced less than half refined neodymium-compound supply became very
of 1%of the world’s steel, according to estimates tight in 2020 and markets for other magnetic rare
from the World Steel Association. China, on the earths, such as dysprosium compounds, remained
other hand, produced 62% — dwarfing every other under pressure. Initial concerns shifted from
country combined, and significantly above its 54% whether China would be able to continue to supply
share a year earlier. The country has long coveted rare earths as the coronavirus spread to concerns
the status of top producer. In the late 1950s, at the about western demand just as lockdowns came into
launch of China’s Great Leap Forward, Chairman force in Europe and the US. As a result, the overall
Mao pledged to overtake Britain in steel and other market remained relatively balanced since the world
industrial production within 15 years, and by 1996 got the rare earths it needed at the end of 2019 in
it had pulled clear of the rest of the pack. But this anticipation of the Lunar New Year holiday season
recent surge is a sign of Beijing’s determination to before demand crumpled. Going into the outbreak,
fend off the impact of global economic weakness. the supply-demand balance was much tighter for
While steel mills fell quieter in Europe, the US and dysprosium and terbium in particular than it was for
India, Chinese producers kept running through its the light rare earths. Shutdowns consumed a lot of
Covid crisis and are producing at an even faster the material that was floating around in the market,
rate than they did in 2019. Production of the metal and price hikes reflected that. But with that said,
is an important indicator for an otherwise opaque the neodymium-praseodymium market doesn't
set of government policies, which draw on an array operate with a lot of overhang either. An upward
of state-controlled or state-influenced sectors to lift momentum behind those two light rare earths was
output (Hume). created as demand started to come back in Europe
and in North America (Woodall).
Rare Earth Elements
China's goal for rare earth development is to
There are 17 rare earth metals, the lanthanide form a new pattern for industry with a reasonable
series of elements and two others with similar development pace, orderly production quotas,
properties, scandium and yttrium. Rare earth efficient utilization, scientific and technological
elements are vital to most modern electronic products innovation and coordinated development with high-
including electric vehicles, wind turbines, and a end manufacturing. As China is keen to push the
range of military technologies. China's stranglehold industry to enter the development stage with high-
on rare earth metals and their supply chains has end applications and higher value-added products,
been highlighted by the disruption wrought by the the government is gradually giving full play to the
strategic value of rare-earth applications to upgrade
348
