Source: Cailian News Agency
Recently, the third China Rare Earth Industry Chain Forum in 2023 was held in Ganzhou. A reporter from Cailian News Agency learned from the meeting that the industry has optimistic expectations for further growth in rare earth demand this year, and has expectations for liberalizing the total amount control of light rare earths and maintaining stable rare earth prices. However, due to the easing of supply constraints, rare earth prices may continue to decline.
Cailian News Agency, March 29(Reporter Wang Bin) Price and quota are two key words in the development of the rare earth industry in the past few years. Recently, the third China Rare Earth Industry Chain Forum in 2023 was held in Ganzhou. A reporter from Cailian News Agency learned from the meeting that the industry has optimistic expectations for further growth in rare earth demand this year, and has expectations for liberalizing the total amount control of light rare earths and maintaining stable rare earth prices. However, due to the easing of supply constraints, rare earth prices may continue to decline.
In addition, many experts at the meeting pointed out that the domestic rare earth industry needs to make breakthroughs in core technologies. Liu Gang, a member of the National Development and Reform Commission and vice mayor of Qiqihar City, Heilongjiang Province, said, “At present, China’s rare earth mining and smelting technology is internationally advanced, but in the research and development of new rare earth materials and key equipment manufacturing, it still lags behind the international advanced level. Breaking through the foreign patent blockade will be a long-term issue facing the development of China’s rare earth industry.”
Rare earth prices may continue to decline
“The implementation of the dual carbon target has accelerated the development of industries such as wind power and new energy vehicles, leading to a sharp increase in the demand for permanent magnet materials, the largest downstream consumption area of rare earths. However, in recent years, the total amount control indicators of rare earths have to some extent failed to meet the growth of downstream demand, and there is a certain supply and demand gap in the market.” A rare earth industry related person said.
According to Chen Zhanheng, Deputy Secretary General of the China Rare Earth Industry Association, resource supply has become a bottleneck in the development of China’s rare earth industry. He has mentioned many times that the total amount control policy has seriously restricted the development of the rare earth industry, and it is necessary to strive for the release of the total amount control of light rare earth minerals as soon as possible, allowing light rare earth mining enterprises such as Northern Rare Earth and Sichuan Jiangtong to arrange their own production based on their own production capacity, rare earth ore supply, and market demand.
On March 24th, the “Notice on the Total Amount Control Indicators for the First Batch of Rare Earth Mining, Smelting, and Separation in 2023″ was issued, and the total amount control indicators increased by 18.69% compared to the same batch in 2022. Wang Ji, Manager of the Rare and Precious Metals Division of Shanghai Iron and Steel Union, predicted that the total amount of mining, smelting and separation of the second batch of rare earth indicators will increase by about 10% to 15% in the second half of the year.
Wang Ji’s view is that the relationship between supply and demand of praseodymium and neodymium has changed, the tight supply pattern of praseodymium and neodymium oxide has eased, there is currently a slight oversupply of metals, and orders from downstream magnetic material companies have not met expectations. Praseodymium and neodymium prices ultimately need consumer support. Therefore, the short-term price of praseodymium and neodymium is still dominated by weak adjustment, and the price fluctuation range of praseodymium and neodymium oxide is predicted to be 48-62 million/ton.
According to data from the China Rare Earth Industry Association, as of March 27, the average price of praseodymium and neodymium oxide was 553000 yuan/ton, down 1/3 from last year’s average price and close to the average price in March 2021. And 2021 is the profit inflection point of the entire rare earth industry chain. It is widely believed in the industry that the only areas identified for growth in demand for rare earth permanent magnets this year are new energy vehicles, variable frequency air conditioners, and industrial robots, while other areas are basically shrinking.
Liu Jing, Vice President of Shanghai Iron and Steel Union, pointed out, “In terms of terminals, it is expected that the growth rate of orders in the fields of wind power, air conditioning, and three Cs will be slower, the order schedule will become shorter, and the prices of raw materials will continue to rise, while terminal acceptance will gradually decrease, forming a stalemate between the two sides. From the perspective of raw materials, imports and raw ore mining will maintain a certain increase, but market consumer confidence is insufficient.”
Liu Gang pointed out that in recent years, there has been a significant upward trend in the prices of rare earth mineral products, which has led to a sharp increase in the production costs of back-end enterprises in the industrial chain, a significant decline in benefits or serious losses, leading to the occurrence of “production reduction or inevitable, substitution or helpless” phenomena, affecting the sustainable development of the entire rare earth industrial chain. “The rare earth industry chain has multiple supply chain nodes, long chains, and rapid changes. Improving the price mechanism of the rare earth industry is not only conducive to achieving cost reduction and efficiency increase in the industry, but also effectively improving industrial competitiveness.”
Chen Zhanheng believes that the price of rare earths may continue to decline. “It is difficult for the downstream industry to accept the price of praseodymium neodymium oxide exceeding 800000 per ton, and it is not acceptable for the wind power industry exceeding 600000 per ton. The recent auction flow of bidding transactions on the Stock Exchange is a very clear signal: in the past, there was a rush to buy, but now there is no one to buy.”
Unsustainable “mining and marketing upside down” of rare earth recovery
Rare earth recycling is becoming another important source of rare earth supply. Wang Ji pointed out that in 2022, the production of recycled praseodymium and neodymium accounted for 42% of the metal source of praseodymium and neodymium. According to statistics from Shanghai Steel Union (300226. SZ), the production of NdFeB waste in China will reach 70000 tons in 2022.
It is understood that compared to the production of similar products from raw ore, the recycling and utilization of rare earth waste has many advantages: shorter processes, lower costs, and reduced “three wastes”. It makes reasonable use of resources, reduces environmental pollution, and effectively protects the country’s rare earth resources.
Liu Weihua, Director of Huahong Technology (002645. SZ) and Chairman of Anxintai Technology Co., Ltd., pointed out that rare earth secondary resources are a special resource. During the production of neodymium iron boron magnetic materials, about 25% to 30% of corner waste is generated, and each ton of praseodymium and neodymium oxide recovered is equivalent to less than 10000 tons of rare earth ion ore or 5 tons of rare earth raw ore.
Liu Weihua mentioned that the amount of neodymium, iron, and boron recovered from two-wheel electric vehicles currently exceeds 10000 tons, and the dismantling of two-wheel electric vehicles will increase significantly in the future. “According to incomplete statistics, the current social inventory of two-wheeled electric vehicles in China is around 200 million units, and the annual output of two-wheeled electric vehicles is around 50 million units. With the tightening of environmental protection policies, the state will accelerate the elimination of lead-acid battery two-wheeled vehicles produced in the early stage, and it is expected that the dismantling of two-wheeled electric vehicles will greatly increase in the future.”
“On the one hand, the state continues to clean up and rectify illegal and non compliant rare earth resource recycling projects, and will phase out some recycling enterprises. On the other hand, large groups and capital markets are involved, giving it a more competitive advantage. The survival of the fittest will gradually increase the industry concentration,” Liu Weihua said.
According to a reporter from Cailian News Agency, there are currently about 40 enterprises engaged in the separation of neodymium, iron, and boron recycled materials nationwide, with a total production capacity of over 60000 tons of REO. Among them, the top five recycling enterprises in the industry account for nearly 70% of the production capacity.
It is worth noting that the current neodymium iron boron recycling industry is experiencing a phenomenon of “reverse purchase and sales”, that is, buying high and selling low.
Liu Weihua said that since the second quarter of last year, rare earth waste recycling has basically been in a serious upside down situation, seriously restricting the development of this industry. According to Liu Weihua, there are three main reasons for this phenomenon: the significant expansion of production capacity of recycling enterprises, the downturn in terminal demand, and the adoption of a metal and waste linkage model by large groups to reduce the circulation of waste market.
Liu Weihua pointed out that the existing rare earth recovery capacity across the country is 60000 tons, and in recent years, it is intended to expand the capacity by nearly 80000 tons, which has resulted in serious overcapacity. “This includes both the technical transformation and expansion of existing capacity, as well as the new capacity of the rare earth group.”
Regarding the market for rare earth recycling this year, Wang Ji believes that at present, orders from magnetic material companies have not improved, and the increase in waste supply is limited. It is expected that the output of oxide from waste will not change much.
An industry insider who did not want to be named told the Cailian News Agency that the “mining and marketing upside down” of rare earth recycling is not sustainable. With the continuous decline in rare earth prices, this phenomenon is expected to be reversed. A reporter from Cailian News Agency learned that at present, Ganzhou Waste Alliance plans to collectively purchase raw materials at a reduced price. “Last year, many waste plants were shut down or reduced in production, and now waste plants are still the dominant party,” said the industry insider.
Post time: Mar-30-2023