|8/10/2014 by mdc|
|As widely expected, the appeal by China to the World Trade Organization against an earlier ruling calling on the country to lift export quotas was rejected on Thursday. The China Commerce Ministry responded on Friday saying it will strengthen regulations on resources in line with WTO rules. China is responsible for roughly 90 percent of mined output of rare earths and is also the top user. The country downstream industry consumes 70 percent of global production. The easing of export restrictions as mandated by the WTO is not expected to have an influence on prices.|
Exports since 2005 has not even come close to the export ceiling and over the past three years, quotas were more than 20,000 tonnes above actual exports. What could have an impact is the removal of export taxes on rare earths products - tungsten and molybdenum are also subject to these taxes - which have been raised and widened on several occasions and are now levied at 15 per cent to 20 per cent by the General Administration of Customs.
Roskill Information Services says in a report scrapping these taxes could affect nonChinese producers by potentially reducing FOB rare earth prices, and bring it in line with domestic Chinese prices. The impact, at least in the short term, could be significant as domestic prices were on average 36% below reported FOB prices this year according to David Merriman, senior analyst at the London-based metals and minerals consultancy.