Falling prices force Baotou to act
Source: Agencies |
October 24, 2012, Wednesday
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Print Edition
Print Edition
INNER Mongolia-based Baotou Steel Rare-Earth (Group) Hi-Tech Co, China's top rare earths producer, will halt some of its smelting and separation operations for a month to stabilize slumping prices amid weak demand, it said yesterday.
China accounts for the great majority of the world's rare earths supply. Domestic prices of the group of 17 metals, which are used in products ranging from smartphones and wind turbines to hybrid cars, have tumbled by around 50 percent since the start of the year as a global slowdown hits demand.
"Demand for rare earths has weakened in the second half on the back of the economic slowdown, causing a sustained fall in prices," Baotou said in a filing to the Shanghai Stock Exchange.
China's economy slowed for a seventh straight quarter in the July-September period, growing just 7.4 percent, its weakest showing since the depths of the global financial crisis, as a result of dwindling demand at home and abroad.
"To stabilize the market and balance supply and demand, Baotou will halt its smelting and separation of some units from Oct 23," it said.
Baotou, which saw its third-quarter net profits drop nearly 90 percent on year to 120 million yuan (US$19.19 million), will also halt raw supplies to other smelters and separation companies for a month.
The company's shares fell 13.8 percent in the June-September quarter but remain up 72 percent so far this year. Its shares closed at 33.11 yuan yesterday.
Prices of rare earths soared last year by hundreds of percent after China curbed illegal exports. Hot money flowed into an illiquid sector but later left, contributing to the drop.
Meanwhile, the higher prices persuaded countries such as the US, Canada and India to resume output after shutting mines decades ago.
In August, China unveiled new export quotas on rare earth elements, which lifted the yearly figure by 2.7 percent.
China accounts for the great majority of the world's rare earths supply. Domestic prices of the group of 17 metals, which are used in products ranging from smartphones and wind turbines to hybrid cars, have tumbled by around 50 percent since the start of the year as a global slowdown hits demand.
"Demand for rare earths has weakened in the second half on the back of the economic slowdown, causing a sustained fall in prices," Baotou said in a filing to the Shanghai Stock Exchange.
China's economy slowed for a seventh straight quarter in the July-September period, growing just 7.4 percent, its weakest showing since the depths of the global financial crisis, as a result of dwindling demand at home and abroad.
"To stabilize the market and balance supply and demand, Baotou will halt its smelting and separation of some units from Oct 23," it said.
Baotou, which saw its third-quarter net profits drop nearly 90 percent on year to 120 million yuan (US$19.19 million), will also halt raw supplies to other smelters and separation companies for a month.
The company's shares fell 13.8 percent in the June-September quarter but remain up 72 percent so far this year. Its shares closed at 33.11 yuan yesterday.
Prices of rare earths soared last year by hundreds of percent after China curbed illegal exports. Hot money flowed into an illiquid sector but later left, contributing to the drop.
Meanwhile, the higher prices persuaded countries such as the US, Canada and India to resume output after shutting mines decades ago.
In August, China unveiled new export quotas on rare earth elements, which lifted the yearly figure by 2.7 percent.
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