SHANGHAI, Jun. 19 (SMM) – "Demand for rare earth grew recently, and prices are expected to rebound. But when market situations will turn around is not sure." Said Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company General Manager Zhang Zhong. He revealed the company will reform to resolve waste water discharge problem by next June.
Rare earth prices peaked in June 2011 before falling, and are now at late 2010 levels. Zhang Zhong stated prices drop slows, and demand grows, but rare earth supply surplus will not ameliorate in the near term.
Rumors that two workshops of the company suspended production had been circulating in the market. Zhang Zhong reported the two production raw material separation workshops restarted following the Chinese New Year holiday, and production suspension will help ease raw material surplus and relieve cash flow pressure. Domestic average operating rate of rare earth magnetic materials is 40%, and the rate in the company is higher than the level.
Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company's share prices have been falling since the middle of last year, with rare earth prices having dropping by 80%. Zhang Zhong said decreases in the company's share prices are slower than rare earth prices, and that shows investors are still confident towards the company. But Zhang believes 60% rare earth is used in new materials, and the industry is very prosperous as science and technology advance.
Net margins of listed shareholders are RMB 1.51 billion in 2012, down 56.8% YoY. The margins in Q1 this year dropped more sharply to RMB 245 million, down 80% YoY. The company's share prices have been falling since 2H last year.(Edited by SMM)