National Lighting Bureau Exec Sounds off on Price Hikes in Lamp Market

John P. Bachner, the executive director of the National Lighting Bureau (NLB), Silver Spring , Md., has an interesting take on the current pricing situation in the lamp market. Following is an excerpt from a NLB press release about the impact pricing increases in rare-earth elements (REEs) are having on fluorescent lamps.

Terbium. Erbium. Yttrium. They're hardly household names, but they and 14 other rare-earth elements (REEs) are essential to the operation of a variety of household products (flat-panel displays and color TVs), as well as medical devices, the batteries used in hybrid and electric vehicles, catalytic converters, and processes like petroleum refining. They also comprise about 85% of the phosphors used in fluorescent lamps, and a growing supply/demand imbalance is resulting in REE price hikes that already are being reflected in lamp manufacturers' pricing.

The United States was a principal source of REEs from the mid1960s to the early 1990s. Today, however, China is almost the sole source of supply, and it has been limiting exports (since 2006) and throttling back production (since 2010). While world demand is expected to hit 180,000 tons/year in 2012, world supply that year is likely to be less than 160,000 tons. In 2010, China set its export quota at 30,000 tons. The impact on cost is stunning. The price of some rare earth oxides has increased 4,500% in the past 10 years, and in many cases most of the rise has occurred in the past three years alone.

China became the world's near-exclusive source of REEs almost by default. REEs have historically been comparatively cheap and difficult to mine. China can mine far less expensively than many other nations, because of its comparatively lax environmental standards. And now that it controls the market, low-priced REEs are becoming a thing of the past.

The new, high prices for REEs should justify the relatively high cost of REE mining, resulting in a growing supply. Whether or not that supply will catch up with growing demand by 2015 or even 2020 remains to be seen. In the meantime, higher prices for fluorescent lighting and a wide array of other REE-dependent products is a certainty.