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China has revealed plans to open a rare earth metals exchange in the city of Baotou, according to Reuters. The exchange will not offer futures trading, and will only trade on spot prices.The aim of the exchange is to centre the world’s market pricing in China, rather than yielding to foreign market expectations.
The news of a new exchange comes as prices continue to rocket for rare earths, with cerium oxide prices up 475% in the last 5 months.
But there is some bad news for those who believe the rare earth demand story will last forever.
The FT Reports:
“I’ve never seen anything like it,” says one US-based purchaser of rare earths. “People are trying to wriggle out of using rare earths in any way they can, whether by developing new products or finding substitutes.”
So long as prices continue to rise dramatically, human ingenuity will seek to work its way around the problem by replacing rare earths with other commodities. Whether, and when, it is successful remains unknown.