Rare Earths Prices are as Expensive as they were in the 1970s – Inflation Adjusted Historical Rare Earth Metal Price since 1970s in Pounds Sterling

Rare Earth Metal Prices - Not as cheap as they use to be

Rare earth elements or rare earth metals are a set of seventeen chemical elements in the periodic table, specifically the fifteen lanthanides plus scandium and yttrium.  Scandium and yttrium are considered rare earth elements since they tend to occur in the same ore deposits as the lanthanides and exhibit similar chemical properties.

They have several industrial applications from electronics (semiconductors), glasses, laser, catalyst, magnets to sensors.  The end-use markets for rare earths are estimated to be: catalysts, 47%; metallurgical applications and alloys, 13%; alloys, 11%; glass polishing and ceramics, 10%; permanent magnets, 9%; ceramics, 5%; rare-earth phosphors for computer monitors, lighting, radar, televisions, and x-ray-intensifying film, 5% (Ref: US Geological Survey,Mineral Commodity Summaries 2011).  Until 1948, most of the world's rare earths were sourced from placer sand deposits in India and Brazil.  In the 1950s South Africa took the status as the world's rare earth source, after large veins of rare earth bearing monazite were discovered.  Through the 1960s until the 1980s, the Mountain Pass rare earth mine in California was the leading producer.  Today, the Indian and South African deposits still produce some rare earth concentrates, but they are dwarfed by the scale of Chinese production.  China now produces over 97% of the world's rare earth supply, mostly in Inner Mongolia even though it has only 37% of proven reserves.

New demand has recently strained supply, and there is growing concern that the world may soon face a shortage of the rare earths, this is a very important element to examine.  Plus the strategic political importance to these elements in the semiconductor and sensors used in modern weapons, new mines are been reopened or developed in the US, Australia in particular.

Rare earth elements are not exchange-traded in the same way that precious or non-ferrous metals are. Instead they are sold on the private market, which makes their prices difficult to monitor and track.  There are some reviews of the rare earth market and price, but these don’t usually cover the long term price history or adjusted to account for inflation.  The estimated annual average rare earth price data came from the US Geological Survey.  The US Geological Survey used estimated the US price in actual dollars by a weighted average of imports and export.  The historical UK Pound to US Dollar exchange rate data came from Lawrence H. Officer, "Dollar-Pound Exchange Rate From 1791," MeasuringWorth, 2011 at www.measuringworth.com/exchangepound/.  The prices were adjusted for inflation by converting the nominal price into the equivalent in 2011 US Dollars and 2011 GP Pounds Stirling.  The US inflation data came from the historical CPI from the US Department of Labor.  For the UK inflation the data came from Dominic Webb (2006) "Inflation: the Value of the Pound 1750-2005" Economic Policy and Statistics Section, Research Paper 06/09, House of Commons Library, UK.  From this you get the following results shown in the graph below.

Historical Annual Average and Inflation Adjusted Rare Earths Price since 1940 in Pounds Sterling and US Dollars

The doted lines are the unadjusted nominal annual average rare earths price, and the sold lines are the inflation adjusted rare earths price.  The first thing that becomes obvious is that the unadjusted rare earths price was at its lowest in the early 1961s in Dollars and Pounds Sterling at approximately $82 and £30 per a metric tonne respectively.  Furthermore before 2010 the nominal price peak occurred in 1948 in US Dollars at $14,700 per metric tonne and in occurred in 2008 in UK Pounds at £7,300.   

However when you examine the inflation adjusted rare earths price, you notice that its lowest prices was in still occurred in 1961, in both Dollars and Pounds terms at $618 and £535 per metric tonne respectively.   The pries see in 2010, in both dollars and Pounds are comparably to the inflation adjusted prices in the 1970s, nevertheless are not as high as those before the 1960s.  From the 1940s the inflation adjusted price decreased from $140,000 and £95,000 to $27,000 and £23,000 per metric tonne.   From this chart it can clearly be seen that since the 1962 the inflation adjusted price of rare earths has oscillated between $2,000, and £1,500 to $20,000 and £20,000 per metric tonne.  Using the price in 1971 as a baseline the inflation adjusted platinum price in UK Pounds and US Dollars was indexed and this is shown below.

Historical Inflation Adjusted Rare Earths Price since 1940 in US Dollars and GB Pounds, Indexed to 1971

The indexed price data clearly displays that the historic inflation adjusted rare earths prices has fallen considerably since the 1940s.  Their real prices are no where near the prices they use to be before 1960.  To in examine the relative price changes during this historical cheap price for rare earths the indexed price data is plotted from 1960 and is shown below. 

Historical Inflation Adjusted Rare Earths Price since 1960 in US Dollars and GB Pounds, Indexed to 1971

It can be seen from this chart that the inflation adjusted price in both US Dollars and UK Pounds were stable during the 1960s.  During the 1970s the price was very volatile increasing 800% by 1972 only to eventually decrease to 200% of the 1971 price in Dollars, in Pounds the price also returned to the inflation adjusted value of 1971.  The price was prettily volatile during the 1980s, but not as bad as the 1970s.  However there was a step change in the price at the end of the 1980s and early 1990s.  Since then there has been a gradual decrees in the inflation adjusted pries, were upon it bottoms in 2005 at the same value as seen in the early 1980s, at just under 200% of the 1971 price in Dollars and just above 100% of the 1971 price in Pounds.   Since 2005 the price has rapidly raisin to over 800% of the 1971 price in Dollars and 600% of the 1971 price in Pounds. 

So from a historical perspective this makes the price of rare earths as expensive as the inflation adjusted prices of the early 1970s, but not as expensive as they were before the 1960s.

Written by Inflation Monkey. Join on Google+.

Platinum Prices are the Most Expensive Since 1960 - Inflation Adjusted Historical Platinum Price in Pounds Sterling and US Dollars

Platinum Prices is back to the 1960s and 1980s peak

Platinum is a dense, malleable, ductile, precious, gray-white transition metal. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River".  It exhibits a remarkable resistance to corrosion, even at high temperatures, and as such is considered a noble metal.  It is one of the rarest elements in the Earth's crust and has an average abundance Platinum of approximately 5 μg/kg.  It is a transition metal and a member of the platinum group metals (PGM).  The catalytic properties of the six platinum group metals – iridium, osmium, palladium, platinum, rhodium, and ruthenium – are outstanding, but platinum has the lowest melting point and is the least dense of them.  This unique property of platinum and other platinum group metals account for their widespread use in the chemical and automotive industries.  

Sources of platinum production are quite limited. More than 88% of world Platinum production is concentrated in just two countries: the Russian Federation and South Africa.  South Africa alone accounts for 75% of as the second biggest supplier at 13%.  The six metals of the PGM occur in nature in close association with one another and with nickel and copper. They are among the least abundant of the Earth's elements. Of the few known deposits, those in South Africa and Russia are by far the largest. There are fewer than ten significant pgm miningcompanies in the world.

Platinum in used in a range of industries, but in 2011 around 32% of all the mined supply were used in the automotive industry as the catalyst in automobile catalytic converters with an almost equal amount used in industrial applications.  With petrol (gasoline) engine the amounts of air and fuel burnt are usually in chemical balance, there being no excess of either.  Under these conditions, and at the quite high temperatures (350-750°C) of the gasoline exhaust gas, platinum and/or palladium oxidise the pollutants carbon monoxide (CO) and hydrocarbons (HC), while rhodium catalyses the reduction of nitrogen oxides (nitric oxide and nitrogen dioxide, termed NOx) to nitrogen.  Auto companies, therefore, use catalysts containing platinum and rhodium, palladium and rhodium, or a mixture of all three to meet current gasoline vehicle emissions regulations. These catalytic converters are known as three-way catalysts.  

In marked contrast a diesel engine always operates with a large excess of air, often referred to as lean-burn operation with the an additional complication from the operating conditions of diesel engines that result in low exhaust gas temperatures (120-350°C).  This means that threeway catalysts cannot perform under these conditions, therefore it been necessary to restrict NOx emissions by sophisticated diesel engine control measures and to use an oxidation catalyst to convert excess HC and CO to water and carbon dioxide. To date, only platinumbased catalysts have been able to be used with diesel engines.  Demand for diesel powered cars in Western Europe has grown remarkably over the last decade which as driven the demand for platinum automobile catalytic in Europe.  Since 1979, the automotive industry has emergedas the principal consumer of PGM. Platinum is even used as an investment through platinum coins and platinum jewellery.  With the ever increasing use and demand for high performance catalysts, the every growing number of automobiles and jewellery, this is a very important element to examine. 

The annual average Platinum price data came from www.kitco.com and it dates back to 1960.
The historical UK Pound to US Dollar exchange rate data came from Lawrence H. Officer, "Dollar-PoundExchange Rate From 1791," MeasuringWorth, 2011 at www.measuringworth.com/exchangepound/.  The prices were adjusted for inflation by converting the nominal price into the equivalent in 2011 US Dollars and 2011 GP Pounds Stirling.  The US inflation data came from the historical CPI from the US Department of Labor.  For the UK inflation the data came from Dominic Webb (2006) "Inflation:the Value of the Pound 1750-2005" Economic Policy and Statistics Section, Research Paper 06/09, House of Commons Library, UK.  From this you get the following results shown in the graph below. 

Historical Annual Average and Inflation Adjusted Platinum Price since 1960 in Pounds Sterling and US Dollars

The doted lines are the unadjusted nominal annual average platinum price, and the sold lines are the inflation adjusted platinum price.  The first thing that becomes obvious is that the unadjusted palladium price was at its loest in the early 1960s in Dollars and Pounds Sterling at approximately $80 and £30 per a troy ounce respectively. 

However when you examine the inflation adjusted platinum price, you notice that its lowest prices was in 1999 in both GB Pounds and US Dollars at around £332 and $511 per troy ounce respectively.  Since them the price peaked in 2010 at approximately £1,184 and $1,798 per troy ounce respectively, where upon it dropped back to slightly 2011.  In US Dollar, the inflation adjusted price peak in 2010 was very similar to the value of the previous peaks in 1968 and 1980.  On the other hand when priced in Pounds Starlings the inflation adjusted price peak in 2010 was very close to that in 1980 but not 1968, which was larger, which can be easily seen in the chart below showing only the inflation adjusted platinum price with a linear axis (non logarithmic, unlike the first chart).

Historic Inflation Adjusted Platinum Price since 1960 in US Dollars and Pounds Sterling

The inflation adjusted price bottomed in 1998 at $514 and £324 per troy ounce respectively.  Coincidently this was the year before the palladium priced peaked.  It is interesting to note that between 1960 until 1985 the inflation adjusted price bottomed at around $500 in Dollars and in the region of £460 to £560 in Pounds Sterling.  The all-time peak inflation adjusted price occurred in 1980 in US Dollars at approximately $1,850, but occurred in 1968 in UK Pounds at approximately £1,520 per troy ounce.  When priced in Dollars, there were 3 peaks in the inflation adjusted price, 1968, 1980 and 210.  However when priced in Pounds there were only 1 occasions it peaked, 1968.  There next 2 highest peaks occurred in 1980 and 2010 at approximately £1,000 and £1,200 respectively (which are 33% and 21% lower then the peak in 1968). 

Using the price in 1971 as a baseline the inflation adjusted platinum price in UK Pounds and US Dollars was indexed and this is shown below.

Historical Inflation Adjusted Platinum Price since 1960 in US Dollars and GB Pounds, Indexed to 1971

The indexed price data clearly displays that the historic inflation adjusted platinum prices has been considerably volatile since 1960.  In fact the most stable period for the price in both US Dollars and UK Pounds, was during the 1990s.  The annual average price in US Dollars in 2011, was within 93% of the inflation adjusted peak prices of 1980.  So in reflection platinum is very expensive in US Dollars relative to its historic inflation adjusted price, but only moderately expensive when priced in Pounds.

Written by Inflation Monkey. Join on Google+.