Beijing, Aug 11 (IANS): Turnover of China's rare earth products exchange surged drastically in the first seven months of this year due to declining prices and rising demand.

The Baotou Rare Earth Products exchange processed 116,400 tonnes of products in the first seven months, with a trading volume of 15.755 billion yuan ($2.57 billion), up 277 percent compared to the full year of 2014, Xinhua reported quoting Gu Ming, the exchange general manager.

"The drastic price decline of rare earth products strengthened the market demand," Gu said.

During the first six months of this year, the average export price of rare earth products was 32,000 yuan per tonne, down 34.7 percent from the same period of last year, according to local customs.

As of the end of July, about 120 rare earth enterprises and agents opened accounts in the exchange.

The exchange will compile the rare earth price index and promote cross-border e-commerce in the near future.

China began setting quotas and high duties on rare earth exports in 2010, causing friction with the European Union, Japan and the US.

Quotas were removed on January 1 this year, and export duties were cancelled in May after a WTO ruling in August 2014 declared the measures inconsistent with WTO rules and China's accession protocol.

The Baotou Rare Earth Products Exchange was launched in March 2014 in China's Inner Mongolia region. It was initiated by China North Rare Earth Group Co. Ltd, the country's leading rare earth producer, and another 12 firms and institutions with a registered capital of 120 million yuan.

Rare earth metals are vital for manufacturing high-tech products ranging from phones and wind turbines to electric car batteries and missiles.