ferrite magnets
The current situation of rare earth market and its mid- to long-term forecast
Jun 17,2021.

After experiencing the prosperous scene of rising volume and prices in the first quarter, the price of rare earth products in the second quarter continued to decline, and the domestic rare earth market was no longer good. However, since June, the rare earth permanent magnets sector has oscillated. On June 3, stimulated by the news, there was a short-term daily limit wave, but then it immediately entered an adjustment period. Regarding the later trend of the rare earth market, the analysis believes that the domestic rare earth product demand is not good in the short term, and the market outlook will maintain an overall weak operation. However, in the medium and long term, the structural inflection point of the supply and demand of the rare earth market has come, and it will enter a medium and long-term steady upward cycle. In the future, rare earth prices will increase steadily and may even start a new round of market doubling.

rare earth market

Short-term: poor demand or difficult to change the weak market

Since the second quarter of this year, the price index trend of the domestic rare earth market has continued to fall, the price of domestic praseodymium and neodymium rare earths has continued to fall, the price of heavy rare earths has fallen, and the weak rare earth market is difficult to change.

In terms of prices, domestic mainstream products such as neodymium oxide, metal neodymium, neodymium praseodymium oxide, neodymium praseodymium alloy, and praseodymium metal have continued to decline, and the downward trend is obvious. As of June 7, the domestic rare earth prices of neodymium oxide, metallic neodymium, neodymium praseodymium oxide, and neodymium praseodymium alloys have all fallen by about 20% from the beginning of April.

The continued decline in domestic rare earth product prices is closely related to poor demand. First, downstream permanent magnet manufacturers are actively stocking up in the early stage, increasing on-site inventory, and generally not being enthusiasm for restocking, resulting in limited transactions in the domestic rare earth market. The upper, middle and lower reaches are mainly wait-and-see. Traders have serious resistance to high prices and tend to purchase at low prices. Second, the sales of downstream new energy vehicles have slowed down, and the rare earth industry has cooled down due to this impact. Data show that in May, the sales volume of my country's auto industry is estimated to be 2.204 million vehicles, down 2.1% from the previous month. At the same time, affected by factors such as chip shortages, soaring commodity prices, and the appreciation of the renminbi, the performance of the new energy automobile industry and air-conditioners this year may have fallen short of expectations.

Affected by the decline in the market, since April, relevant rare earth companies have continued to lower the listed prices of rare earth products, and the market's negative sentiment has gradually increased. On June 7, Southern Rare Earth once again lowered the listed prices of medium and heavy rare earth oxides. The prices of 6 varieties including gadolinium oxide and terbium oxide were lowered by the smallest 0.5% and the largest 6.2%. On June 9, Northern Rare Earths also lowered the listing price of light rare earth oxides, and the reduction was relatively large.

Domestic rare earth market prices have fallen

Regarding the late price trend of the rare earth market, the analysts of Ruidao Metals.com believe that the rebound of the market price of NdPr is not strong, and the low range is still the preferred range for purchases, and the follow-up trend may run weakly. Business analysts believe that with the sustainable development of new energy vehicles, wind power, and inverter air conditioners downstream of rare earths, their demand growth is modest, but the domestic rare earth supply has started normally, coupled with the recent poor transactions on the market, and the procurement is not active. , The market price of rare earths is expected to continue to fall in the later period. Non-ferrous information analysts believe that July is the traditional off-season for the manufacturing industry, and it is during the overseas summer holiday period. It is expected that downstream companies will not be willing to purchase in late June, and rare earth prices may weaken steadily.

Medium and long-term: Short supply is expected to enter a steady upward cycle

Despite the recent fluctuations in the rare earth market, in the medium and long term, with the support of raw material prices, rapid global economic recovery, and good expectations for the development of downstream traditional and emerging industries, rare earths are still in short supply. The prices of mainstream products are still relatively high. Generally, there is confidence in the improvement of its market. The favorable factors for the rare earth market are as follows:

Firstly, the downstream manufacturing market such as new energy vehicles is operating well and the demand is huge. With the blessing of the concept of carbon neutrality, downstream manufacturing markets such as new energy vehicles, wind power generation, inverter air conditioners and other downstream manufacturing markets still have huge demand for rare earth functional materials, which is conducive to firm quotations for holders. On the one hand, the market is optimistic about the prospects for the development of new energy vehicles. According to industry estimates, the new energy vehicle industry will maintain a rapid growth trend from 2021 to 2025. By 2025, global sales of new energy vehicles are expected to reach more than 15 million, and domestic new energy vehicles will exceed 5 million by 2025.

Secondly, offshore wind power is developing rapidly and the future can be expected. According to analysis, offshore power generation may become a dark horse in the downstream of rare earth permanent magnets this year. In recent years, my country's offshore wind power has developed rapidly, and offshore wind power projects in coastal provinces and cities have quickly landed. As of the end of 2020, my country's cumulative installed capacity of offshore wind power was approximately 9 million kilowatts. According to the 14th Five-Year Plan for power development, my country will focus on the development of 7 large-scale offshore wind power bases from 2035 to 2050, and the total installed capacity of large-scale bases in 2050 will reach 132 million kilowatts. From 9 million kilowatts to 132 million kilowatts, my country's offshore wind power development has a huge space, and the leading role of rare earth permanent magnet products cannot be underestimated.

Thirdly, foreign demand remains unabated, and exports are gaining momentum. According to data released by the General Administration of Customs on June 7, my country's rare earth exports in May hit the highest level since April 2020, reaching 4171 tons; from January to May, my country's rare earth exports increased by 8.7% year-on-year to 19,000 Ton.

Fourthly, the policy is favorable, and the rare earth industry maintains healthy development. In recent years, the national policy level has continued to exert efforts to implement total production control and at the same time clean up the society's rare earth stocks. After the release of the “Regulations on the Management of Rare Earths (Draft for Solicitation of Comments)”, which is currently seeking comments, it is expected to ensure the medium and long-term high-quality development of the rare earth industry, and the profits of companies related to the rare earth industry chain are expected to grow sustainably in the long term.

Related analysis agencies also gave favorable forecasts, believing that under the conditions of upstream supply constraints and downstream demand boom, rare earth prices are expected to enter a longer-term steady upward phase. Zhongtai Securities said that the demand in the rare earth market will be further deepened in the second half of this year, and the industry's prosperity will continue to improve. Rare earth demand is expected to enter the mid- to long-term business cycle, and the supply will fall short of demand in the next three years. Tianfeng Securities said that a structural turning point in the supply and demand of the rare earth market is coming, the demand for high-end magnetic materials is increasing, and the profit margins of the rare earth industry chain are opened. In the long run, the linkage increase in the price of light and heavy rare earths is expected to continue. CITIC Securities said that downstream demand supports prices, the rare earth sector may start a rebound, and rare earth prices are expected to start a long bull.

Source from: iziranquanmeiti

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