The rare earth element yttrium, which is widely used in the military, aerospace, and semiconductor industries, has recently attracted global market attention due to a sharp price increase caused by supply shortages.

According to data from Argus Media, at the beginning of the year, the CIF price of yttrium oxide with a purity of 99.999% in Europe was approximately $6 per kilogram. Now, based on pricing contracts with various conditions, the price has risen to between $220 and $320 per kilogram, representing a price increase of 3,600% - 5,300%.

Simply put, yttrium is often used in special alloys for aircraft engines and high-temperature resistant coatings for turbine blades. Yttrium is also required in the semiconductor manufacturing process. Special compounds of yttrium (such as YO thin films) are high-performance dielectric layers in certain wafer processes. This rare earth is also used in fields such as medicine, lasers, and superconducting materials.

The price trend of yttrium oxide in the past six months is not difficult to understand. Since China, the world's largest rare earth producer, included yttrium in the export control list in April this year, the scramble for limited yttrium resources in Europe and the United States has continued to this day.

The Aerospace Industries Association (AIA) of the United States said that yttrium is crucial to the world's most advanced jet engines.

The vice president of international affairs of the organization, Duck Hardwick, revealed: "At present, our supply chain is highly dependent on imports from China - this dependence has led to cost increases in the face of worsening shortages."

According to data from the US Geological Survey, in the four years leading up to 2023, more than 90% of yttrium oxide imports to the US market came from China.

The semiconductor industry is also concerned about the yttrium shortage. According to an anonymous industry insider, the severity of the shortage has reached 'nine out of ten'.

Due to the opaque yttrium market, there are significant differences in inventory information from overseas markets at present, and there are also large disparities among various companies.

A rare earth trader revealed that their inventory has decreased from 200 tons to 5 tons. Looking ahead, some analysts pointed out that as long as there is no significant relaxation on the supply side, the price of yttrium will not drop significantly.

On the overseas supply side, MP Materials, which has received investment from the US Department of Defense, is mining yttrium at its Mountain Pass project; Lynas Rare Earths in Australia is also expanding its production capacity, producing yttrium at its Mount Weld mine and processing plant in Malaysia. In addition, ReElement Technologies, a US resource recycling and reuse company, has also revealed plans to increase the production of yttrium oxide to 200 tons per year by December this year, and aims to double it again next year.