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Issue #584 | Breakbulk Quarterly

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2014 Media Kit
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China rare earth accounting change masks export slump

By: | at 08:00 PM | Channel(s): International Trade  

China’s customs authority has changed the way it presents rare earths exports, a Reuters analysis of the figures showed, giving the impression that January’s exports were six times bigger than they would have been under the old methodology.

China has angered and alarmed many of its trading partners by choking off supplies of rare earths, which are used in many high-tech applications such as wind turbines, precision-guided weapons, hybrid car batteries, and Apple Inc’s iPads.

As the world’s dominant producer and exporter of rare earth metals, China’s sharp cut in exports—and a subsequent rocketing in world prices—has triggered diplomatic complaints from Washington, Tokyo and Brussels and a flurry of plans by mining companies to develop rare earths elsewhere.

China says it is reining in rare earths mining to control environmental damage, but a decision to cut quotas for exports of rare earths in the first half of 2011 has prompted the United States to consider filing a WTO complaint.

China’s exports of rare earth elements and compounds fell to 646.8 tonnes in January, down 88.8 percent from 5,784 tons a year earlier, according to a like-for-like comparison of detailed data issued by China’s General Administration of Customs.

January Export Volume Bulked Up
The customs office also publishes its own headline figure for rare earths exports, which until December 2010 were listed simply as “rare earths”. But the January data shows “rare earths and products”, bulking up the month’s export volume to 4,087 tonnes.

Although the headline customs figure now includes rare earth products, the year-on-year comparison for January is still based on last year’s headline figure, which did not include such products. That gives a year-on-year fall of only 29.3 percent.

No separate comparative data for rare earths products was immediately available.

The effect of the change is to make China’s rare earth exports for the month appear six times bigger than they would have been under the old methodology, and to imply a 44 percent fall in the average value of a tonne of exports from December, rather than a 15 percent rise.

Reuters’ calculations based on previous months’ data, also supplied by the customs office, show the value of exports has risen by about $10,000 per ton since last July, when it averaged $14,405 per ton.

In January, the average value of exports hit $74,805 per tonne. Or, using the customs office’s new methodology, it fell back to $36,297 per tonne, the lowest since last September.

The price rises have been a boon to the few companies outside China with rare earths in their mining portfolio. U.S. miner Molycorp Inc went public in July at $14 per share. Its shares were last traded at $49.77 on Tuesday.

Shares in Canada’s Rare Element Resources have soared even faster, while Australian prospectors Arafuraand Lynas have also gained.

The bulk of China’s rare earths exports in January went to Japan, which received 260 tonnes, Hong Kong with 85 tonnes and South Korea with 70 tonnes. Exports to the United States slumped 97 percent to 37 tonnes, according to the detailed customs data. (Reuters)