China's new rare-metal exchange to boost nation’s pricing power

By Wang Bozun Source:Global Times Published: 2020/1/2 21:23:40

A representative from local enterprises look at the display case of rare-earth metals and oxides at the National Center of Quality Supervision and Inspection for Tungsten and Rare Earth Products (NCQSIFTREP) in Ganzhou, East China's Jiangxi Province on Friday. Photo: Li Hao/GT



The Ganzhou Rare Metal Exchange, China's first rare-earth and tungsten augmented products trade center, started operation in East China's Jiangxi Province on Tuesday,  a move that could boost China's rare-earth products market pricing and discourse power.

As a commodity trading platform built by the Ganzhou government, the exchange was founded by Ganzhou Rare Earth Group and several other state-owned enterprises, with registered capital of 100 million yuan ($14.37 million), according to its website.

The business scope is defined as spot trading and market services for rare earths, tungsten, cobalt, tin, molybdenum and other metals and their extended products.

"Building such an exchange could promote the competitiveness of rare metals including rare earths and tungsten augmented products in the capital market, and enhance the market pricing and discourse power of rare metals," Zeng Wenming, mayor of Ganzhou, was quoted as saying on the exchange's website.

An employee of the exchange declined to comment as it is still in the trial period.

Rare-earth metals are crucial for many high-tech industries, including aerospace and weapons. China, which accounts for about 80 percent of global rare-earth production, emphasized that rare earths were a national strategic resource in May as the trade war between China and the US went on.

As the biggest rare-earth exporter in the world, China has the absolute power to set prices by adjusting the supply volume, Wu Chenhui, an independent analyst of rare earths, told the Global Times on Thursday, adding that "however, there has been no exchange in China that could offer benchmark prices for rare earths so far."

"Many commodities in the world have benchmarks for pricing. Brent crude, for example, is the benchmark for crude oil pricing worldwide, and the London Metal Exchange offers the benchmark prices for copper and aluminum. But trade of rare earths and tungsten metals in China is still based on spot prices," Wu said.

There have been several rare-earth trade centers such as the Baotou Rare Earth Products Exchange in North China's Inner Mongolia Autonomous Region racing to offer the benchmark price, Wu said.

"So building an exchange that offers benchmark prices for rare earths has been a direction in China, and the Ganzhou Rare Metal Exchange is a big step toward that," he added.

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