Japan’s Rare Earth Consumption Increased 7.8% in 2017

Jun. 12, 2018

Following a 60% drop from 2007 through 2013, consumption has since increased steadily year-over-year

According to the latest statistics from relevant industry authorities, Japan’s consumption of rare earth oxides (or oxide equivalents) totaled 18,112 tonnes in 2017, an increase of 7.8% over the year prior.

After falling by almost 60% from 2007 through 2013, Japan’s rare earth consumption has since increased at a healthy CAGR of 8.2% – buoyed higher primarily by rising consumption of neodymium, praseodymium, cerium, and yttrium.

Overall, from 2013 through 2017 Japan’s annual TREO consumption increased 37% and is on-track to reach a record-high level by 2025 at the current rate of growth.

Neodymium, praseodymium, cerium, and yttrium see greatest increases in consumption

In 2017, Japan’s consumption of cerium oxide (or oxide equivalent) increased 11.2% year-over-year, and since 2013 has increased at a CAGR of 11.3% due to rising demand for exhaust gas catalysts, cerium-based abrasives, and other applications.

Consumption of didymium oxide (“PrNd oxide”) and/or neodymium oxide (or oxide equivalents) increased 10.0% year-over-year in 2017, and since 2013 has increased at a blistering CAGR of 17.6% due primarily to growing demand for NdFeB permanent magnets, as well as rising demand for ceramic capacitors, amongst numerous other applications.

In 2017, Japan’s consumption of yttrium oxide (or oxide equivalent) increased 9.8% year-over-year, and since 2013 has increased at a robust CAGR of 7.3% due to increasing demand for LED phosphor as well as several ceramics-related applications.

Lastly, consumption of “other” rare earth oxides (or oxide equivalents), including dysprosium oxide, terbium oxide, gadolinium oxide, holmium oxide, erbium oxide, ytterbium oxide, and lutetium oxide, collectively increased 35.4% year-over-year in 2017 (due in large part to rising demand for dysprosium, terbium, and gadolinium oxide), and since 2013 have collectively increased at a CAGR of 9.9%.

Consumption of europium and mischmetal down, lanthanum consumption up, and samarium consumption flat year-over-year

In 2017, Japan’s consumption of lanthanum oxide (or oxide equivalent) increased 5.6% year-over-year, and since 2013 has increased at a meek CAGR of just 1.1%.

In 2017, Japan’s consumption of samarium oxide (or oxide equivalent) was the same as the year prior, a level at which it has remained since 2010.

In 2017, Japan’s consumption of europium oxide (or oxide equivalent) decreased 7.7% year-over-year, and since 2013 has decreased steadily at a CAGR of -8.3% due to the ongoing substitution of fluorescent lamps with LED lamps globally.

Lastly, in 2017 Japan’s consumption of mischmetal (a mixture of light rare earth metals commonly used in battery alloys and metallurgical applications) decreased 4.3% year-over-year, falling to a level equal to that of 2013 due to competition from incumbent Li-ion battery technology.

Rising demand good news for Lynas but can’t come soon enough for near-term expansion

Overall, the magnitude and consistency of rare earth demand growth in Japan since 2013 is good news for Lynas Corporation – owner and operator of the Mt. Weld mine in Australia, and primary supplier of PrNd oxide to Japan’s permanent magnet industry.

Lynas’ current PrNd oxide output level (~ 6,000 tonnes per annum) exceeds Japan’s needs by approximately 25%. With Lynas recently announcing plans to boost output by a further 20% from January 2019 onward, demand growth in Japan cannot come soon enough.

With Japanese demand saturated, Lynas is poised to grow increasingly (and uncomfortably) reliant on buyers in China as it moves to expand production. If not already, we expect the company will look to leverage relationships with permanent magnet manufacturers in China to establish three-way supply contracts with end-users in Europe and North America, thereby minimizing exposure to China’s opaque demand market.

 

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