SHANGHAI, Jun. 17 (SMM) - Operating rates at Zhenghai Magnetic Material rose in Q2 as orders from wind power grew significantly. The average operating rates of the company in Q1 2013 was only 30%, and has risen to 70% in Q2. The average operating rate in Q3 is expected to exceed 80%. The company's income from wind power orders in 2013 is expected to rise to 60%, but overall gross profits will be dragged down due to low gross margins of wind power.
Energy-saving elevator demand grows steadily. Energy-saving elevator production prefers rare earth permanent magnet motors, even if rare earth prices soar. Demand from energy-saving elevator has been growing steadily, with major customers including Shanghai Mitsubishi Elevator, Mitsubishi Electric Shanghai Electric Elevator and Shanghai Yungtay Elevator. The company has received orders from Thyssen Krupp.
Demand from energy-saving air-conditioner industry is still unstable. Gree attempted to use rare earth permanent magnet motor in energy-saving air conditioners, but was distressed due to significantly fluctuating rare earth prices during 2011-2012. Rare earth prices have fallen to levels before they rose in 2011. Although ferrite has no cost advantage over rare earth permanent magnet, demand for neodymium-iron-boron permanent magnets used in air conditioners is still soft due to concerns over fluctuating rare earth prices. Demand for neodymium-iron-boron permanent magnets used in air conditioners is expected to grow is rare earth prices remain stable and with the support from favorable industry policies.(Edited by SMM)