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Sharply rising prices of key raw materials necessitate this step

Tokyo, August 13, 2010: Shin-Etsu Chemical Co., Ltd. (Head Office: Tokyo) announced that it will increase the price domestically and overseas of rare earth magnets, one of its main products, effective for shipments made starting from October 1, 2010. The average amount of the price increase is 20%.

The prices of such key raw materials for rare earth magnets as the elements neodymium and dysprosium have been continuing to rise steeply due to new mining restrictions and a cutting of export quotas for rare earth minerals by China, which is the main world supply source for these raw materials. The price of neodymium has risen 2.5 times compared to its price in summer of last year. In addition, since the beginning of this year, the price of dysprosium has sharply increased, and now its price has rose to double that of the beginning of the year, and most recently the pace of its rise has been quickening. There is also a possibility that China will further strengthen its export restrictions in the future, and there seems to be no prospect of a settling down of the upward trend of the prices of these elements.

With regard to its rare earth magnet business, Shin-Etsu Chemical has been making all-out company-wide efforts to reduce costs by implementing such measures as in-company improvement in productivity and plant utilization rates, and at the same time, the company has been carrying out such measures for raw materials as reducing the amount of usage of dysprosium by means of the operation of in-company recycling processes and the development of the new technology of grain boundary diffusion alloyage. However, it has become difficult to absorb the entire burden of the increased costs resulting from the current sharp increases in the prices of the raw materials, and to assure continued stable supply, an upward revision in the price of rare earth magnets has become unavoidable.

Rare earth magnets are highly functional permanent magnets that have more than 10 times the magnetic energy of ferrite magnets, and demand for them is rapidly increasing, starting with applications in hybrid cars and home appliances such as energy-saving air-conditioners and hard disk drives (HDDs) for PCs as well as for various motor applications for industrial equipment and other applications. In the future, it is anticipated that demand for applications in energy-saving related areas, such as electric automobiles and wind-power generation, will further increase.