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China's rare earth exports soar

China's rare earth exports in September surged 55 percent from a year ago, as buyers took advantage of falling prices amid a supply glut that has forced local producers to cut output. Sales by the world's top rare earth exporter hit 3,033 tonnes in September, up 7.2 percent from a month ago, according to data published by the General Administration of Customs on Tuesday. This brings year-to-date shipments to 23,400 tonnes, up 15.8 percent from corresponding 2014 levels.

Prices of rare earths, a group of elements used in strategic sectors like defence and renewable energy, have plunged around 20 percent this year due to weakening demand and oversupply. "Currently, the rare earth market is at its lowest point since 2011," said Wang Qiang, analyst with the Association of China Rare Earth Industry, adding that shrinking demand, oversupply and illegal mining had undermined prices. Rising overseas sales could reflect the fact that more shipments were now being made through official channels following the cancellation of export quotas at the beginning of this year, which has eroded the rationale for smuggling.

Official exports reached 27,769 tonnes in 2014, but as much as 40,000 tonnes could have been smuggled out over the period, according to industry estimates. China is responsible for more than 90 percent of global rare earth supplies and about 80 percent of world consumption, and since 2010 it has been trying to crack down on illegal mining and smuggling in the sector. China said it was trying to reverse the environmental damage done by illegal producers, but critics claim the real motive was to seize pricing power over elements used in smart phones, military jet engines and hybrid vehicles.

Copyright Reuters, 2015