Prices of Chinese cerium rose to their highest level in seven years in the wake of sustained supply shortages and stronger metal demand.

The price uptrend in the cerium market accelerated after the lunar new year holiday in early February, as supply curbs caused by reduced output from large rare earth producers and increased restocking activity from metal plants prompted suppliers to withhold material from sales and maintain higher offers.

Argus assessed the range for 99.5-99.9pc cerium oxide higher at 13,500-15,000 yuan/t ($1,868-2,076/t) ex-works today, up by 68pc at the mid-point from Yn8,000-8,400/t ex-works on 5 February. A few suppliers maintained offers at Yn15,000/t ex-works for the material last week because of lower spot inventories and stronger restocking demand.

A Sichuan-based separation plant said that its cerium products to be yielded in April have been booked at around Yn13,500-14,000/t ex-works. "We have cut our operations by around 30-40pc over the past few months because of reduced ore supplies from the US. Our cerium output was insufficient to meet customers' demand," a source at the plant told Argus.

Reduced output of cerium carbonate from large rare earth producers also tightened spot supplies of cerium oxide, market participants said. Large rare earth plants are inclined to sell cerium and lanthanum carbonate, which led to a sharp fall in spot supplies of cerium carbonate and oxide, a market source told Argus. Increased metal prices and higher demand for cerium-iron-boron (CeFeB) magnets are also attributed to the price uptrend in the cerium market, they added.

More metal plants hiked their offers for 99pc cerium metal to Yn32,000-34,000/t ex-works compared with a week earlier, because of increased orders from CeFeB magnet plants and consecutive price rises in the oxide feedstock market. Some market participants expect that China's output of CeFeB magnets increased to around 100,000t in 2024, up from 80,000t a year earlier, as it has been widely applied in more downstream sectors, including electric bicycle, toy, bag buckle, acoustical device and industrial motor manufacturing, because of comparatively lower prices against neodymium-iron-boron (NdFeB) magnets.

But the price uptrend has shown signs of easing over the past week, as more separation plants in Inner Mongolia's Baotou were eager to sell inventories at current price levels to lock in profits. Some suppliers found it difficult to sell material at prices higher than Yn14,000/t ex-works this week. The steep price uptrend also kept more seaborne buyers from accepting much higher offers from Chinese exporters.

The tight spot supply and higher domestic prices have pushed up export prices. But it is difficult to sell 99.5-99.9pc cerium oxide at prices higher than $2,000/t fob China as more overseas buyers opted to scale back purchases, an export firm told Argus.

More market participants expect the cerium market to stabilise in the near term on the back of increased consumer demand and low inventories at most separation plants.