Expect Increase in Electronic Hardware Prices

Thanks much in part to the Chinese government. If you’ve been paying attention to world trade news the past month, you may have heard mention of some very important bits of trade regulation that would dramatically alter the pricing structure of consumer electronics.

In December, China announced that it would cut the exports of rare earth metals by a total of 35 percent from its annual quota. These metals include Neodymium, Cerium, Praseodymium, Samarium, Promethium, Europium, and various others in the set of seventeen that many rarely hear about outside of a chemistry class. All however, are absolutely essential in the production of high-tech consumer electronics as well as electric vehicles. The news is even more dire considering that China holds a virtual monopoly for the resource: a staggering estimated 97 percent of the rare earth metals market, mostly due in part to the bankruptcy of many western rare earth metal companies years ago as a result of China’s aggressive low labor costs.

While this may be good news for the surviving outside companies such as American firm Molycorp (whose stock shot up 15.23% yesterday) and Lynas of Australia (up 11.65%), it may take several years before outside suppliers can fill the gaping hole in supply.

Other areas are not standing still however, the European Union may ask the World Trade Organization (WTO) for sanctions against the Chinese while Japanese firms are scrambling to reduce dependence on the valuable resource. In the mean time, don’t be surprised if that TV you wanted to buy suddenly became more expensive.

Source:
Forbes
DailyTech