China is responsible for more than 95% of the global supply of rare earths and over the weekend the country's Ministry of Land and Resources (MLR), announced that the first production quota for rare earths this year will be set at 46,900 tonnes.

Another quota will be announced later this year and the allotment is broadly in line with recent output caps.

2012 output has not been disclosed, but production totaled 93,800 tonnes in 2011, according to Bloomberg. The MLR also set production for tungsten concentrate at 43,500 tonnes and antimony at 37,680 tonnes. In December China pegged 6-month export quotas at 15,501 tonnes, also broadly in line with the 2012 figure.

The export quotas – which Japan and the US took all the way to the World Trade Organization dispute resolution body – appears to have become a meaningless exercise.

China only exported some 13,000 tonnes of rare earths through authorized channels during the whole of last year, a mere 40% of the allowed export.

A crackdown on illegal mining, consolidation of the industry under a few large producers, mothballing mines – China's number one producer recently decided to extend its production halt to three months – and the quotas have not helped to put a floor under REE prices which have continued to fall from 2011's stratospheric levels.

The value of many of the 17 elements used in a variety of industries including green technology, defence systems and consumer electronics are down more than 80%.

While mid-2012 prices looked as if it will begin to stabilize, values continue to soften. Abundant, less valuable REEs have experienced the sharpest reversals.

Lanthanum oxide – used in ceramics and fuel catalysts – for example rose from a price of just $8.71/kg in 2008 to average $117/kg in the third quarter of 2011. By the third quarter of 2012 it was down to $19.54/kg. As of 7 January 2013 it’s fallen further to $11/kg. Inside China that same kilogram costs $7.54.

This price behaviour can be seen across the board: cerium oxide, used to polish TV screens and lenses, is trading at $12 from an all-time high of $118 in the September 2011 quarter. In 2008 the price for cerium oxide was $4.56.

Praseodymium, used as an alloy in aircraft engines and welder goggles, was available from China in 2009 for $18/kg. After peaking in the second half of 2011 along with all the other rare earths it was still priced at $163/kg during the first quarter of 2012. Monday's benchmark price was $85, down from $105 last September.

The price of a kilogram of samarium oxide increased dramatically from a mere $3.40/kg in 2009 to average $103/kg in 2011. Used in jet fighter electrical systems among other applications, samarium actually increased in value from the first to the second quarter of 2012, from $73/kg to $82/kg.

Now it has plummeted to $25/kg free-on-board while the domestic price in China is only $7.70 for samarium. Heavy, scarcer REEs have generally held up better, but some have experienced price declines of more than 50%. Neodymium oxides, used in windmills, continue to slump – from $338/kg in Q3 2011 to $105.31/kg in Q3 2012 to $80/kg today.

A hybrid vehicle ingredient, dysprosium, rocketed from a price of $118.49/kg in 2008 to average $1,449/kg in 2011. It peaked at an astonishing $2,300 by September of that year.

Dysprosium, also used in conjunction with vanadium and other elements in making laser materials, has now given up more than $1,500 per kilogram and now goes for $630/kg. Inside China it is worth only $385/kg.

The reversal in europium oxide – the priciest REE – which is used in medical imaging and the nuclear and defence industries – has been most startling.

The price of europium increased almost 10-fold from $492/kg in 2009 to average $4,900/kg in the third quarter of 2011. In the first quarter of 2012, importers still had to pay $3,623/kg and stayed above $2,000 for most of the year. The price is now $1,600 a kilogram. Chinese domestic europium is almost half that at $867/kg.