Resources Science ›› 2019, Vol. 41 ›› Issue (5): 860-871.doi: 10.18402/resci.2019.05.04

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Non-equilibrium and early warning research on the supply and demand of China’s rare earth market

Jingjing SUN(), Yutao LEI()   

  1. School of Economics and Commerce, South China University of Technology, Guangzhou 510006, China
  • Received:2018-09-15 Revised:2019-03-09 Online:2019-05-25 Published:2019-05-25

Abstract:

China’s rare earth plays a mainstay role in the world, but there are few systematic studies on the non-equilibrium state of supply and demand in the market. This study extended the application of non-equilibrium theory and its model to analyze the non-equilibrium state between effective supply and effective demand of the rare earth resources market in China, establishing hyperbolic equations and conducting empirical analysis by using the 2000-2016 macro-level data on China’s rare earth market supply and demand, industrial enterprises and mining industry, and finally analyzing the crux of long-term imbalances between supply and demand. The results show that China’s rare earth market is characterized by decentralization, buyer monopoly, low prices, rampant smuggling, and strong policy intervention, which are important causes of its non-equilibrium condition. Based on grey relational analysis, rare earth price, production technology and cost, enterprise income and debt, macroeconomic policy, and industrial development are sensitive factors of rare earth’s effective supply and demand. Non-equilibrium degree calculation results indicate that the non-equilibrium trend of supply and demand in rare earth market is changing from oversupply to excessive demand. Based on the early-warning threshold values, in many years the market was in a serious warning state where supply exceeded demand by more than 35%. The conclusions may provide some basis for warning and decision support for promoting a balanced development of China’s rare earth market.

Key words: rare earth market, non-equilibrium theory, effective supply, effective demand, early warning, China