The European Photovoltaic Industry Association expects the UK
market to grow to around 200-750MW by 2012, rising to over 4GW by 2020
Life is about to get more expensive. Yesterday W. R. Grace & Co put on rare earth surcharges for its fluid catalytic cracking catalysts, used to refine the petroleum products we all use so much and love. Oil demand being inelastic and in effect rare earths being a very small part of the cost of a gallon of petrol, the Grace Davison division should have little trouble in making the price increases stick. I rather think that they will all go up again once China brings in its unified pricing system. I don’t see their action lowering the price, more likely an attempt to get China’s pricing mechanism back to a basis of cost plus profit.
Grace Announces Rare Earth Surcharge for FCC Catalysts and Additives
COLUMBIA, Md., Aug 25, 2010 (BUSINESS WIRE) —
Grace Davison, an operating segment of W. R. Grace & Co. (NYSE:GRA), today announced the implementation of a rare earth surcharge for its fluid catalytic cracking (FCC) catalysts and additives for the petroleum refining industry. Effective October 1, 2010, Grace will implement a global rare earth surcharge due to rapidly escalating prices as a result of recently imposed export tariffs and quota restrictions by major producers in the rare earth market.
In addition, Grace will increase FCC catalyst prices by 5% to 7%, effective January 1, 2011, or as contracts allow, as a result of inflation in other key raw materials and to support ongoing research and technical service efforts. Grace is providing price guidance in advance to support customer budget preparations for 2011.
From a rare metal blog perspective, it’s good timely reminder of just
how inelastic much of rare metals and earths demand actually is. Some
substitution is theoretically possible, but not on a quick timetable and
not without a whole lot of money spent on research. Money that’s only
really likely to get spent if the price of rare metals really went
through the roof, or the actual product became mostly unavailable via an
earlier than 2015 Chinese cut-off.
From an investment perspective, our job is to try to see the rare metal world as it will be in 2013-2015 and not as it is today. Who will be in production and sales, and how profitable are they likely to be? The speculators on the board play for the scalping opportunities, but quite honestly there are better pickings in other sectors with bigger followings. For now, in the rarefied world of rare metals, a company might come out with really great news, and nothing much happen to the stock price. We are still at the stage where the investment early bird can get the worm. It’s a few years off yet before it becomes the second mouse that gets the cheese.
Finally as we prepare here for our last bank holiday of the summer, I was wondering if it’s possible for some talented reader(s) to come up with a matrix of some sort where we could rate the various companies as to where they stand vis a vis one another. Feasibility plan complete. Cut-off grade used. LREEs v HREEs. Roads or rail at site. Refining technology in house, etc. It might even be possible to give each component a “score” or weight, and to then cumulatively add all the scores to provide a rough and ready ranking. Off course, how much cash they have and the share structure will count for much too, but even those can be rated and given a score, and then perhaps listed separately alongside the technical ratings. A sort of rough and ready Moody’s of rare metals. I will try to play around with the idea this weekend. Have a great weekend.