SHANGHAI, Nov 4 (SMM) - On November 4, the eightieth special auction of China North Rare Earth (Group) was completed, and all four bids of 20 mt of PrNd alloy were sold at an alarm price of 930,000 yuan/mt (SMM note: the alarm price is the highest price that can be bid on that day). It is worth noting that in the 79th special bidding session, which ended yesterday, 20 mt of PrNd alloy were also sold at an alarm price of RMB 890,000/mt, indicating a clear rising trend.
Also on November 4, the average spot price of SMM PrNd alloy stood at 915,000 yuan/mt, up 30,000 yuan/mt from a day ago and recording a single day increase of 3.39%. While back on October 8, the average spot price of SMM PrNd alloy was only 740,000 yuan/mt, which surged by 175,000 yuan/mt or 23.6% in just one month.
According to SMM, PrNd alloy prices have been firm since last week, with a few transacted at 880,000 yuan/mt last Friday. The trading was active at the beginning of this week, but spot transactions were thin; and the market was mostly wait and see as the participants’ fears over high prices weakened and hence made less shipments. The output of metal factory in Ganzhou dropped slightly in October due to the impact of power rationing. While the market has stabilised after the power rationing eased.
The supply of raw ore continues to be tight, and the ore prices trended upward along with the rising prices of auxiliary materials like hydrochloric acid, iron, fluoride, etc. As such, the production costs of PrNd alloy moved up, and its prices are still correcting upside this week. Meanwhile, some large rare earth enterprises in north China will be shut down for maintenance in November, and the import of heavy rare earth ore from Myanmar was still blocked, coupled with the price hike of raw ore to different degrees. Imports of light rare earth ore from US rose to 60,000 yuan,mt, and domestic light and heavy rare earth ore have rose to 50,000 yuan/mt and 330,000-340,000 yuan/mt, respectively.
However, the acceptance of the current price level of PrNd alloy by the magnetic materials factories is low. In order to reduce the procurement costs, part of the low-end magnetic material factories Inner Mongolia, Sichuan and other places have decided to use lanthanum-cerium alloy instead of PrNd alloy. While some of the wind motor upstream high-end magnetic material factories in Inner Mongolia, Zhejiang, and Jiangxi have stopped accepting new orders, and the downstream air conditioning enterprises are also looking for alternatives of rare earth permanent magnets.
According to some research institute, since the fourth quarter, rare earth downstream production has entered the seasonal peak, while the rare earth inventory has stayed low at 2500 mt. The rare earth separation enterprises are also affected by power rationing to different degrees, triggering the price hike of rare earth. In the medium and long term, downstream demand, especially new energy vehicles, inverter air conditioners, etc. continue to be high; but the supply of rare earth is unlikely to see significant increase as the mining of rare earth is restricted by the quota. As such, the rare earth prices are likely to stay high in the long run.
