Rare earth ushered in a long-lost "smile" in April, and the downstream magnetic material factory is full of production, how will the market perform in the future? 【SMM Monthly Analysis】
Following the stabilization of the decline at the end of March, the expectation of a reduction in the supply of ion ore and the procurement of large groups made rare earths usher in a long-awaited rebound in April. Praseodymium neodymium oxide rose 13.98% in April, dysprosium oxide rose 12.09% in April, and terbium oxide soared 23.69% in April. According to SMM, entering May, the rare earth market as a whole was relatively stable, the price fluctuation range was narrow, and the purchase of large groups made dysprosium oxide and terbium oxide usher in a slight increase on May 10. The downstream magnetic material factory is well scheduled, and many companies have orders scheduled to mid-June, can the continuous improvement in demand drive the rare earth to continue to strengthen in May?
Praseodymium neodymium oxide price rose by 13.98% in April, and production increased by 0.37% month-on-month in April
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In terms of light rare earths, taking the trend of praseodymium neodymium oxide as an example, according to SMM quotations, the average price of praseodymium neodymium oxide on April 30 was 403,500 yuan/ton, and the average price on March 29 was 354,000 yuan/ton, and its average price rose by 49,500 yuan/ton in April, with a monthly increase of 13.98% in April. Entering May, as of May 10, praseodymium neodymium oxide rose slightly driven by the listing price of northern rare earth in May, and its average price on May 10 was 406,000 yuan/ton.
In terms of praseodymium neodymium oxide output: the domestic output of praseodymium neodymium oxide in April was 5,967 tons, an increase of 0.37% month-on-month. There has been a significant increase mainly in Guangxi. According to SMM research, in April, a separation plant in Jiangxi was shut down for maintenance, and the local output of praseodymium neodymium oxide decreased slightly month-on-month. In April, the price trend of praseodymium and neodymium was improving, and the operating rate of some separation plants in Guangxi was raised, and the local output of praseodymium and neodymium oxide increased by 17% month-on-month.
The price of dysprosium oxide rose 12.09% in April, and domestic production shrank by 0.8% month-on-month in April
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In terms of heavy rare earths, taking the trend of dysprosium oxide as an example, according to SMM quotations, the average price of dysprosium oxide on April 30 was 2040 yuan/kg, and the average price of dysprosium oxide on March 29 was 1820 yuan/kg, and its average price rose by 220 yuan/kg in April, and its monthly increase in April was 12.09%. Entering May, as of May 10, dysprosium oxide fluctuated in a narrow range, and its average price on May 10 was 2050 yuan/kg.
In terms of dysprosium oxide production: the domestic output of dysprosium oxide in April was 217 tons, a decrease of 0.8% month-on-month, and the main reduction was reflected in Jiangxi. According to SMM, some separation plants in Jiangxi Province underwent equipment maintenance in April and did not start production that month, resulting in a 3% reduction in local dysprosium oxide production month-on-month.
Terbium oxide price increased by 23.69% in April, and domestic production decreased by 4.2% month-on-month in April
In terms of heavy rare earths, taking the trend of terbone oxide as an example, according to SMM quotations, the average price of terbium oxide on April 30 was 6620 yuan/kg, compared with the average price of 5365 yuan/kg on March 29, its average price rose by 1255 yuan/kg in April, and its monthly increase in April was 23.69%. Entering May, as of May 10, terbium oxide fluctuated in a narrow range, and its average price on May 10 was 6,600 yuan/kg.
In terms of terbium oxide production: the domestic terbium oxide output in April was 40.8 tons, a month-on-month decrease of 4.2%, mainly reflected in Jiangxi, where the local output decreased by about 12%. According to SMM's research, some separation plants in Jiangxi Province underwent equipment maintenance in April, resulting in the suspension of production in that month, and the local terbium oxide output was significantly reduced month-on-month.
Market outlook: If the relationship between supply and demand has been "appropriate", rare earth prices will fluctuate in a narrow range
In addition to some unexpected factors that cause price disruption, product prices are mainly affected by fundamental changes such as supply and demand, and rare earths are no exception. In 2023, the growth rate of rare earth supply will be greater than the growth rate of downstream demand, which will make the rare earth market have a relatively obvious downward adjustment in 2023. Entering 2024, the overall downstream demand for rare earths in the first quarter is poor, making rare earths in a weak state as a whole. With the expectation of disturbance in the supply of ion ore, the inventory of magnetic material companies has almost bottomed out, and the order demand of magnetic material companies has improved in April and May, so that rare earths ushered in a considerable rebound in April. Entering May, what changes will occur in the fundamentals of rare earths?
On the supply side: From the perspective of import data: According to data from the General Administration of Customs, rare earth imports reached 13,145.9 tons in April this year, a decrease of 32.5% from April 2023. The cumulative import from January ~ April 2024 was 48,842.5 tons, a decrease of 18.1% from January ~ April 2023. According to SMM, the current supply of ion ore can meet the normal demand of the market, and some separation plants still have unconsumed raw material inventory, and the local rare earth mines in Sichuan can also make up for the reduction of American mines. Judging from the output data: since the beginning of this year, the output of praseodymium neodymium oxide has been relatively stable and has not fluctuated much. The output of dysprosium oxide and terbium oxide in April has shrunk, according to SMM, there are market sources that due to environmental reasons, the separation plant in Longnan will be shut down in May, and the market expects that the output of rare earth oxides in Jiangxi will continue to shrink in May. SMM will continue to monitor changes in production in the Yongnan area.
On the demand side: downstream magnetic material companies are scheduled to be full, and many companies are scheduled to produce until mid-June, which will give some support to rare earth prices in May at the demand port. However, in view of the fact that the price of rare earth in April has risen considerably, magnetic material companies consider that their profit margins are very meager, the acceptance of high-priced sources is not high, and the procurement action is more cautious, and its upward momentum is limited.
To sum up, it is expected that the rare earth market as a whole will fluctuate in a narrow range in May, which may foresee some signs from the price trend after the rare earth holiday. The slight increase in the price of light rare earth after Labor Day is mainly due to the increase in the listing price of rare earth in the north to give confidence to market participants, so that its price has risen slightly. The overall trend of heavy rare earths such as dysprosium oxide and terbium oxide is relatively stable, and the recent procurement actions of large groups have caused their prices to rise slightly on the 10th, and SMM expects that with the end of large group procurement actions, their prices will also stabilize again. In short, if the fundamentals of rare earths are not disrupted by unexpected events in May, their prices are expected to fluctuate in a narrow range.
Voices from all sides
Asked "What do you think about the price trend of rare earths?" Shenghe Resources said in a survey a few days ago that rare earth prices are mainly affected by supply and demand. The downward trend in rare earth prices in 2023 is mainly due to the short-term supply and demand mismatch, especially on the supply side, affected by the increase in domestic rare earth production indicators and the substantial growth of imported ores in Southeast Asia, the supply of rare earths will increase significantly during the year, resulting in oversupply in the short term. It is expected that the growth rate of rare earth supply will slow down in 2024, while the overall demand for rare earths will continue to grow, and the supply and demand pattern is expected to improve. >> Click here for details
Huafu Securities Research Report believes that in the short term, the year-on-year growth rate in 2024 is expected to slow down, Myanmar mines are expected to reduce production due to cost and conflict reasons, the demand for household appliances and trams continues to improve, and the price of praseodymium and neodymium has strong support at about 350,000 yuan, and the price is expected to fluctuate strongly; In the medium and long term, the uncertainty of overseas supply increase is strong, the growth rate of domestic indicators is expected to continue to slow down, new energy demand and humanoid robots will successively relay to drive demand growth, and the "old for new" policy is expected to bring both stock and incremental demand, as the most concentrated supply of non-ferrous varieties, even if there is a surplus but the price is relatively controllable, and the long-term supply and demand of rare earth is also expected to shift from excess to tight balance. Risk warning: the downstream demand for rare earths is less than expected.
The research report of Guojin Securities pointed out that as a light rare earth leader, the listing price of northern rare earth often has certain guiding significance. On the whole, since the beginning of 2022, the price of praseodymium neodymium oxide has peaked and fallen, and the listing price of rare earth in the north has generally fallen or remained flat, and only rebounded from September to October 23; The increase in the listing price in May is the first time since November 2023, which is of great significance for thickening the confidence of the industry. With the continuation of the boom in traditional fields such as new energy vehicles and air conditioning, "equipment renewal" and "trade-in" are expected to bring more than expected demand increments, and the low-end demand will rebound under the economic recovery; On the supply side, the growth rate of domestic quotas has slowed down, and imported ores continue to weaken, and we continue to be optimistic about the reversal of rare earth prices. Risk warning: the supply of rare earths exceeds expectations; Demand is lower than expected; Rare earth prices fluctuated more than expected.
Huayuan Securities talked about the performance of the rare earth industry in the research report of "Non-ferrous Metals Industry 23 Annual Report & 24 First Quarter Report: Economic Recovery + Interest Rate Reduction Cycle Resonance, Excellent Performance of Copper and Aluminum Precious Metals, and Outstanding Performance of New Materials for Small Metals": The supply side is phased to ease the rise in rare earth prices, corporate profits continue to be under pressure due to the impact of high-priced inventory, and the prosperity of new energy vehicles + home appliances + exports is gradually picking up, waiting for demand to boost again. The rare earth sector will achieve revenue of 115.6 billion yuan in 2023, a year-on-year increase of -10.34%; net profit attributable to the parent company was 4.9 billion yuan, a year-on-year increase of 49.06%; In Q1 of 2024, the revenue will be 19 billion yuan, a year-on-year increase of -37.34%; The net profit attributable to the parent company was -300 million yuan, a year-on-year increase of -122.47%. The operating performance of enterprises in the new metal materials sector is structurally differentiated, among which permanent magnet materials are under pressure by the performance of rare earth price callbacks, soft magnetic materials benefit from new energy + power + electronic prosperity performance, and some electronic materials are reversed at the bottom of the cash cycle.
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