SHANGHAI, Sept 20 (Reuters) - China's Baotou Steel Rare-earth (Group) Hi-Tech plans to buy praseodymium-neodymium oxide at up to 900,000 yuan ($140,915) per tonne, above market levels, the firm said on Tuesday, in an apparent effort to help stem a decline in rare earths prices.
Baotou, China's top rare earths producer, said in a statement that the purchase is aimed at preserving the resources and stabilizing a market that has been buffeted by speculative purchases and sales.
The company plans to buy the rare earths product via its international trade unit only from producers that have production quotas, the firm added. It did not say how much of the element it would purchase.
Praseodymium-neodymium oxide prices in China ranged near 830,000-880,000 yuan per tonne last week, flat from a week earlier.
It is one of a group of elements used in a range of new technologies from hybrid cars and wind turbines to catalytic converters, permanent magnets and battery cells.
China, which accounts for more than 95 percent of the global supply of rare earths, capped this year's production quota at 93,800 tonnes and exports at 30,184 tonnes, a reduction of about 40 percent in just two years.
Beijing has accelerated its campaign to crack down on illegal private production and enforce consolidation, and has encouraged leading rare earths producers to build stockpiles to preserve the elements.
Baotou was projected to use 9 percent of this year's rare earth oxides production quota of 55,000 tonnes to build a stockpile.
The tighter quotas and crackdown caused prices to soar initially and led to hoarding and speculation that in turn drove prices even higher.
However, since mid-July, prices have fallen sharply as some speculators sought to unload their supplies ahead of a government investigation, according to industry analysts and executives.
Li Zhong, vice-general manager of Baotou Steel Rare-earth (Group) Hi-Tech, said last week that rare earths prices will likely remain high as China continues to rein in the chaotic sector.
Foreign governments have cried foul after Beijing imposed tougher export restrictions on domestic producers, cutting off supplies and driving up global prices.
Source:Reuters