Japan earthquake disaster holding rare earth prices steady

It may have taken calamitous events to slow the bull market in rare earth metals, and the massive devastation in Japan certainly meets the criteria. According to a Reuters.com report on effects of Japan disaster on rare earth metals prices, the effect is unlikely to last more than a few months, when shortages and price rises are expect to continue.

Here's an excerpt from the Reuters article by Scott Malone:

Temporary closures of Japanese businesses, coupled with disruptions to ports and the electric grid as authorities struggle to stop the release of radiation from a quake-hit nuclear plant, may cause delays in shipments of the metals used in everything from Apple iPads to wind turbines. But few rare earth users are likely to turn away previously ordered materials in the face of continued export cutbacks by leading supplier China.

"You're looking at something that probably has an impact of two to four months. We may see some relaxation in prices over that time, more as a knee-jerk reaction," said Jon Hykawy, rare earth analyst with Byron Capital Markets.

Over the long term, no rare earth users are likely to turn away shipments out of concern about the overall current short supply of the materials.

"Deliveries will go on, shipments will go on. There will be delays in processing," Hykawy said at the Asian Metal International Rare Earth Summit in Pittsburgh on Tuesday.

Western companies including Molycorp Inc (MCP.N), Lynas Corp Ltd (LYC.AX), Great Western Minerals Group (GWG.V) and Avalon Rare Metals (AVL.TO) are scrambling to redevelop mines capable of producing rare earth elements.

They are largely focusing on restarting mines that were idled at times when prices were lower, but look economical since China last year began reducing its rare earth exports.