Published date: 28 January 2021

Chinese yttrium oxide prices are expected to rise further in the near term, supported by tightening spot availability after months of inventory consumption and renewed stockpiling demand from domestic and international consumers, according to market participants.

The yttrium oxide market maintained its upward momentum in the past week, reaching the highest level since September 2015. Argus assessed the 99.999pc yttrium oxide range higher at 28,000-30,000 yuan/t ($4,330-4,640/t) ex-works today, up by around 55pc at the mid-point from Yn18,000-19,500/t ex-works in late August. Price hikes accelerated this week, rising by 40pc at the mid-point from Yn20,000-22,000/t ex-works earlier in the week, driven by reduced spot supplies of high-purity yttrium oxide and stronger demand in and outside of China.

Chinese separation plants have reduced operations or shifted production from high-purity to low-purity yttrium oxide since the second half of 2020 because of higher profit margins and rapid growth in demand from the downstream glass fiber and wind turbine industries, which use low-purity products with 99.9pc yttrium content as a main feedstock to improve the performance of glass refractive index and prevent wind turbine blades from eroding.

Spot restocking demand for 99.999pc yttrium oxide started to increase from the coating and ceramics industries over the past week ahead of the lunar new year holiday. Domestic and international buyers are keen to restock material as they are concerned that further supply cuts and higher freight costs will drive yttrium oxide prices higher after the 11-17 February lunar new year holiday.

A few separation plants may consider halting operations for equipment maintenance ahead of the lunar new year holiday, with product deliveries expected to be postponed until early March. This would further tighten spot supplies and prompt more suppliers to raise offers.

Most domestic plants have no plans to ramp up or resume production of high-purity yttrium oxide products, as production costs for 99.999pc yttrium oxide have reached Yn30,000/t, equivalent to current spot offer prices.

Suppliers were reluctant to sell 99.999pc yttrium oxide below Yn28,000/t ex-works today, in light of continued supply tightness, higher production costs and tightening transport services ahead of the lunar new year holiday.

A producer at south China plant sold just 2-3t of the material at Yn30,000/t to a consumer in Shandong province, expecting price rises to continue after the holiday when most consumers would return to the market for replenishments after half a month of feedstock consumption.

A trading firm in Ganzhou city in China's southeast Jiangxi province has received more spot buying enquiries but suspended offers because of an absence of logistics services, after selling less than 10t of 99.999pc yttrium oxide at Yn25,000/t late last week, up by Yn3,000-4,000/t from early this month.