In July, we talked about the shortage of rare earth oxides and the effect on fluorescent lamp pricing. If you don’t have time to read that blog now, we’ll catch you up. Rare earth oxides are essential in the manufacturing of phosphors used in linear and compact fluorescent lamps. The challenge is that 97% of the world’s rare earth metals are produced in China. Recently, China limited production and increased taxes to mine and produce these elements. The result has been a major rare earth oxide shortage and a corresponding increase in fluorescent lamp prices.
As we continue to learn more about the rare earth oxide crisis, we plan to update you with new information. Here’s what we’ve learned over the past few months.
Supply can’t match demand. Currently, the demand for rare earth elements is approximately 134,000 tons a year. Global production is 124,000 tons/year. That’s a deficit of 10,000 tons/year. By 2014, demand is predicted to rise to over 200,000 tons/ year. China is only predicted to produce 160,000 tons/year in 2014, leaving a deficit of 40,000 tons/year.*
Prices are going to go up a lot. Manufacturers are saying price increases may be as much as 1,000%. Prices haven’t increased that much yet, but they’re rising at a rapid rate. All major lamp manufacturers announced price increases for several of their fluorescent-based lighting products that will start in mid-November. This is in addition to the increases companies made earlier. The higher prices make it more important than ever to maintain and try to extend the life of your lighting products and components.
Things may get better after 2014. Analysts are predicting relief will come once new mines and processing facilities are up and running. However, only time will tell if this prediction holds true.*
Though pricing is in flux, we will do our best to provide you the most up to date and accurate pricing possible. For help estimating pricing on your current projects, call our service hub. And, make sure to check back frequently for more updates on the rare earth oxide crisis.
*Philips Lighting REO Brochure – U.S. Dept. of Energy 2010 Critical Materials Strategy Summary