SMM January 9 News:
Baotou Steel announced on the evening of January 9 that, based on the calculation formula and the Q4 2024 rare earth oxide market price, the company plans to adjust the associated transaction price of rare earth concentrate for Q1 2025 to 18,618 yuan/mt (dry basis, REO=50%, excluding tax). For every 1% increase or decrease in REO, the price will increase or decrease by 372.36 yuan/mt (excluding tax). Compared to the Q4 2024 rare earth concentrate transaction price of 17,782 yuan/mt, this represents an increase of 836 yuan/mt, up 4.7% QoQ. The Q1 rare earth concentrate transaction price increase between Baotou Steel and China Northern Rare Earth aligns with SMM's previous expectations.
The Q1 rare earth concentrate transaction price between Baotou Steel and China Northern Rare Earth increased by 4.7% QoQ.
Baotou Steel announced on the evening of January 9 that, based on the calculation formula and the Q4 2024 rare earth oxide market price, the company plans to adjust the associated transaction price of rare earth concentrate for Q1 2025 to 18,618 yuan/mt (dry basis, REO=50%, excluding tax). For every 1% increase or decrease in REO, the price will increase or decrease by 372.36 yuan/mt (excluding tax). Compared to the Q4 2024 rare earth concentrate transaction price of 17,782 yuan/mt, this represents an increase of 836 yuan/mt, up 4.7% QoQ.
According to Baotou Steel's announcement: The company's 2022 annual general meeting approved the "Proposal on the Pricing Mechanism for Routine Associated Transactions of Rare Earth Concentrate and the 2023 Transaction Forecast," which clarified the pricing method and price adjustment mechanism for routine associated transactions of rare earth concentrate with China Northern Rare Earth (Group) High-Tech Co., Ltd. The pricing method includes the calculation formula, parameter values, and explanations of various variables. Both parties agreed that, starting from April 1, 2023, under the condition that the pricing calculation formula remains unchanged, the company's management will calculate and adjust the rare earth concentrate price based on the pricing formula in the first ten days of the first month of each quarter, and re-sign the rare earth concentrate supply contract or supplementary agreement with China Northern Rare Earth and make an announcement. For details, please refer to the company's announcement on March 15, 2023, titled "On the Pricing Mechanism for Routine Associated Transactions of Rare Earth Concentrate and the 2023 Transaction Forecast."
China Northern Rare Earth announced on the evening of October 9, 2024, that, based on the rare earth concentrate pricing method and the Q3 2024 rare earth oxide price, after calculation and approval by the company's 19th general manager office meeting in 2024, the Q4 2024 rare earth concentrate transaction price was adjusted to 17,782 yuan/mt (dry basis, REO=50%, excluding tax). For every 1% increase or decrease in REO, the price will increase or decrease by 355.64 yuan/mt (excluding tax). Compared to the Q3 2024 price of 16,741 yuan/mt, this represents an increase of 1,041 yuan/mt, up 6.22% QoQ.
China Northern Rare Earth announced on the evening of July 9, 2024, that, based on the rare earth concentrate pricing method and the Q2 2024 rare earth oxide price, after calculation and approval by the company's 13th general manager office meeting in 2024, the Q3 2024 rare earth concentrate transaction price was adjusted to 16,741 yuan/mt (dry basis, REO=50%, excluding tax). For every 1% increase or decrease in REO, the price will increase or decrease by 334.82 yuan/mt (excluding tax). Compared to the Q2 2024 price of 16,792 yuan/mt, this represents a decrease of 51 yuan/mt, down 0.3% QoQ.
China Northern Rare Earth announced on the evening of April 9, 2024, that, based on the rare earth concentrate pricing method and the Q1 2024 rare earth oxide price, after calculation and approval by the company's 6th general manager office meeting in 2024, the Q2 2024 rare earth concentrate transaction price was adjusted to 16,792 yuan/mt (dry basis, REO=50%, excluding tax). Compared to the Q1 2024 price, this represents a decrease of 3,945 yuan/mt, down 19.02% QoQ.
China Northern Rare Earth announced on the evening of January 9, 2024, that, based on the rare earth concentrate pricing method and the Q4 2023 rare earth oxide price, after calculation and approval by the company's 1st general manager office meeting in 2024, the Q1 2024 rare earth concentrate transaction price was adjusted to 20,737 yuan/mt (dry basis, REO=50%, excluding tax), up 201 yuan/mt from Q4 2023, an increase of 0.98% QoQ.
Entering 2025, the Q1 rare earth concentrate transaction prices of Baotou Steel and China Northern Rare Earth continued the QoQ upward trend from Q4 2024. A review of the 2024 rare earth concentrate transaction price changes for Baotou Steel and China Northern Rare Earth shows that the Q1 2024 price saw a slight QoQ increase, the Q2 2024 price experienced a significant QoQ decline, the Q3 2024 price saw a slight QoQ decrease and was nearly flat, and the Q4 2024 price showed a QoQ increase.
The upward shift in the Q4 rare earth price center drove the QoQ increase in Q1 rare earth concentrate transaction prices.
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According to SMM quotes, Pr-Nd oxide has recently hovered around 400,000 yuan/mt. After experiencing fluctuations throughout 2024, the price of Pr-Nd oxide began to rise from late July as downstream demand recovered, driving up the prices of rare earth raw materials, especially Pr-Nd oxide. With the upward shift in the price center of Pr-Nd oxide, its Q4 price center rose QoQ compared to Q3, which in turn drove the QoQ increase in Q1 rare earth concentrate transaction prices. However, the rare earth market in Q4 2024 operated within a rangebound fluctuation overall. In Q4 2024, downstream demand in the market fell short of expectations, with orders mainly concentrated among large magnetic material enterprises, while small and medium-sized factories faced poor order-taking conditions. Some magnetic material enterprises indicated that they would begin holiday shutdowns in early January, with production expected to resume on the eighth day of the Chinese New Year, resulting in a shutdown period of up to one month. The order-taking prices of magnetic material enterprises in the market were generally low, making it difficult for metal products to achieve high sales prices. Against the backdrop of some raw ore separation enterprises planning to suspend production for maintenance in January, the market supply of oxides became tight, leading to firm quotations from raw material suppliers, which further exacerbated the price inversion of metal products.
Driven by pre-holiday stockpiling by metal plants and the planned maintenance of rare earth separation plants in January, the price of Pr-Nd oxide rose on January 6 and January 7. However, despite the increased production efforts by magnetic material enterprises to prepare for the upcoming Chinese New Year holiday, the severe price inversion of metal products caused the price of Pr-Nd oxide to pull back on January 8. On the afternoon of January 9, market inquiries increased, and transaction activity showed signs of improvement. SMM expects that the intense back-and-forth negotiations between upstream and downstream in the rare earth market will persist, and most magnetic material enterprises are expected to begin holiday shutdowns around January 20. Rare earth prices are expected to remain in a generally stable rangebound fluctuation trend.
Recommended Reading:
》2024 Rare Earth Market Review and Future Outlook [SMM Analysis]
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