Aug. 5 (Bloomberg) -- China bought 10,000 metric tons of rare earths in the last week, said two people familiar with the matter, as the country stockpiles the metals used in batteries and magnets amid international pressure to ease export quotas.
The State Reserve Bureau paid above-market prices for the rare earths, according to the people, who asked not to be identified because they weren’t authorized to speak publicly about the purchases. China accounts for 90 percent of global rare earths production.
China’s move may be an effort to reverse a decline that’s seen the price of at least one rare earth tumble 76 percent from its 2011 high, according to Peng Bo, an analyst at China Merchants Securities Co. In March, the World Trade Organization sided with the U.S., Japan and Europe in ruling that China hadn’t adequately justified imposing export duties and quotas on rare earths and other resources.
“China is facing imminent pressure to abolish the export quota, so stockpiling is part of the policy reaction to help prop up prices and keep more of the resources at home for future use,” Peng said by phone from Shenzhen today.
Two phone calls to the National Development and Reform Commission, which oversees the State Reserve Bureau, went unanswered today.
The country cut mining permits and imposed production and export quotas in 2007 to reduce pollution and conserve supplies. China has also encouraged consolidation among rare-earths miners and promoted domestic trading.
Rare earths are a group of 17 chemically similar elements critical to make products from wind turbines to magnets for cars and weapons. In June, China set mining quotas for heavy rare earths and tungsten at the same levels as last year, while raising the quota on more abundant light rare earths.
Prices of praseodymium-neodymium oxide tumbled 76 percent to 307,500 yuan a ton after reaching a record in mid-2011, according to data from the Shanghai Steelhome Information Technology Co.