Magnetics Business & Technology - Summer 2013 - (Page 30)

SPONTANEOUS THOUGHTS a Column by Dr. Stan Trout Back to Normal Before I start this article, I need to acknowledge the passing of Keith Delaney in March. To me Keith was both a friend and a trusted colleague, which is rare in business these days. Our industry will miss him, as will I. Over the last decade, Keith was with Molycorp and was the founding executive director of the Rare Earth Industry and Technology Association (REITA). The inspiration for this article comes from attending the Magnetics 2013 conference this year in Orlando. One of the things I noticed was the collective sense of relief over the recent decline in rare earth prices. Many people showed slides like the one here to make their point. There are several questions I think are very salient to the conversation about what has happened in recent months that either weren’t asked, or asked and incompletely answered. So I would like to address them here. Second, we might all ask ourselves if anything we did recently caused the decline in rare earth prices. The most likely answer is not much, which is an admission that we are just as unlikely to prevent or reduce the effect of any future price changes. This is an important consideration as we make business plans for the future. Third, is the rare earth crisis really over? For the time being we are in a lull for neodymium and samarium in terms of price fluctuations. Trouble could return from either a supply shortage or increase in demand, since these forces are rarely in sync. But for now the waters ahead look calm. There is clearly still a crisis for dysprosium, which is reflected in its price. It has not fallen from its peak as much as neodymium on a percentage basis. Fundamentally this is happening because we are still using too much dysprosium. From the supply side, nothing is going to change soon. The only solution is to work on the demand side, discussed in my last article. First, we all know that rare earth pricSo are we really back to normal, or es reported in the literature showed what people now call “the new nora pronounced peak in the summer mal,” after the great recession? I don’t of 2011, followed by a decline that think we are back to normal under eiprices, China, continues today, but it is important to Nd metal October FOB to April reported by Metal ther definition. Today’s lower prices Pages for 2012 2013 understand the origin of these prices. for rare earths are a single aspect of They come from Metal Pages and a complicated situation and may be Asian Metal, who conduct interviews on a regular basis, temporary. To be completely back to normal we also need which reflect the spot market. They don’t include contract everyone, buyers and sellers alike, to be financially healthy prices, which is actually the preferred way to buy or sell and stable. That hasn’t happened yet and that is what we rare earths. However, since contract prices are negotiated need to work on. privately between buyer and seller, the information is usually not transparent. Spot prices became the surrogate for And the final return to normal, at least for me, is my return all prices. What happened to the actual prices that people to consulting and teaching after a brief tour of duty in the paid for real products? I suspect that the peak in contract corporate world. So far it has been an easy and pleasant prices was not nearly as pronounced as spot prices, but it transition. I enjoy having time for clients and the occawill be difficult to find the data necessary to prove or dis- sional bike ride. I hope to interact with some of you in my prove this claim. If nothing else, the rare earth price spike new capacity. was a good lesson in the importance of buying with a contract rather than the using the spot market. About the Author - Dr. Stan Trout has more than 35 years’ experience in the permanent magnet and rare earth industries. Dr. Trout has a B.S. in Physics from Lafayette College and a Ph.D. in Metallurgy and Materials Science from the University of Pennsylvania. Stan is a contributing columnist for Magnetics Business & Technology magazine. Spontaneous Materials, his consultancy, provides practical solutions in magnetic materials, the rare earths, technical training and technical writing. He can be reached at 30 Magnetics Business & Technology • Summer 2013

Table of Contents for the Digital Edition of Magnetics Business & Technology - Summer 2013

Magnetics Business & Technology - Summer 2013
Editor's Choice
Designing Current Transformers with Simulation
Magnets • Materials • Measurement
Application • Component Developments
Research & Development
New Linear Motor Designs Improve Speed and Positioning
Industry News
Marketplace/Advertising Index
Spontaneous Thoughts: Back to Normal

Magnetics Business & Technology - Summer 2013