[minutes] what is the trend of praseodymium and neodymium products after the price soars?

SMM8 March 19: in the online market live conference hosted by SMM, SMM analyst Yang Wenhua delivered a special live broadcast with the theme of the soaring praseodymium-neodymium product price trend. The meeting first introduced the supply and demand pattern of praseodymium-neodymium products in October, and analyzed the influencing factors of price rise in addition to the supply and demand structure. Finally, the future price outlook is carried out.

Supply and demand pattern of praseodymium-neodymium products

The output of new energy vehicles increased by 8% year on year in 2020 and 160% year on year in 2021, with a compound annual growth rate of 38% over the past four years. At present, the domestic market penetration of new energy vehicles is less than 20%, and there is huge room for development. with the upgrading of the consumption concept of energy saving and emission reduction, as well as the rapid development of battery technology, the cost of new energy vehicles has been controlled and the price has been gradually reduced. new energy vehicles ushered in a period of rapid growth.

The installed capacity of wind turbines has grown at an average compound annual rate of 36.2% over the past four years, and the carbon peak will be achieved by 2030. It is proposed that the installed growth rate of wind and photovoltaic power generation will be accelerated, and the rapid growth of downstream demand is expected to increase to 40% in the next five years.

Close to winter, the domestic power coal supply is tight, and the two places have carried out power cuts one after another, resulting in rising prices of auxiliary materials, superimposed raw material prices, upstream separation, and upstream metal enterprises. In order to reduce capital risk, some enterprises take the initiative to reduce the procurement of high-priced raw materials; a few enterprises relocate to Inner Mongolia, where the production cost is lower, in order to reduce production costs such as accessories and electricity charges. Due to the hindrance to the import of Myanmar mines, the domestic supply of medium and heavy rare earth ores is in short supply, and some separation plants with medium and heavy rare earth ores as raw materials are difficult to maintain normal production, and the operating rate has been reduced to less than 50%.

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In October, China produced 5997 tons of praseodymium-neodymium oxide, up 3.2 percent from the previous month, and 5493 tons of praseodymium-neodymium metal, down 2.2 percent from the previous month. The increment of praseodymium and neodymium products is mainly located in Sichuan, Guangdong and Inner Mongolia, and the main reduction is in Zhejiang and Jiangxi. The pattern of supply and demand falls short of demand in October.

The production electricity consumption of metal factories is mostly between 8000 and 9000 kilowatt-hours per ton, and the degree of power reduction in the two metal plants is even greater. The operating rate of some metal plants in Zhejiang and Jiangxi has dropped by 30% and 40%. The shutdown loss of the electrolytic furnace in the metal plant is large, and a few metal factories purchase spot raw materials at high prices in order to maintain the furnace opening, and the output remains stable.

Downstream new energy demand continues to strengthen, but due to the pressure of raw material prices, some magnetic materials factories take orders mainly from long orders to short orders, while the demand for long orders of praseodymium-neodymium metal shrinks in November, and spot purchases are also dominated by a small amount; medium-and low-end magnetic materials, wind turbine upstream magnetic materials enterprises for praseodymium-neodymium metal demand continues to weaken, downstream total demand is weak.

In the upstream supply structure in 2021, domestic light rare earth ores account for the largest proportion, and the development prospect of waste recovery is broad. Domestic light rare earth mines account for 38% of the total upstream praseodymium and neodymium oxide supply, and the light rare earth mining index CAGR is 12% in the past four years. Domestic medium and heavy rare earth ores account for 6% of the total upstream supply, and the mining index is relatively stable. Imported rare earth minerals account for 25% of the total upstream supply. NdFeB waste recycling accounts for about 31% of the upstream supply, and has a broad development prospect.

In 2021, the domestic light rare earth mining target is 149000 tons, and the medium and heavy rare earth mining target is 19000 tons. The domestic rare earth ore supply for praseodymium and neodymium oxide is 35000 tons, accounting for 50% of the total supply.

The mining target will be increased to 20% in 2021, and the supply of praseodymium and neodymium oxide in domestic rare earth mines will reach 67000 tons by 2025.

Due to the great pressure of rare earth mining on environmental governance and the policy control of strategic resources, the increment of domestic rare earth mining index is limited, it is difficult to match the downstream demand of rare earth products expanding year by year, and separation enterprises rely more on imported rare earth mines.

The total rare earth ore and smelting index in 2021 is 40% higher than that in 2018, and all the increments in the past three years have been in light rare earth ore and light rare earth smelting.

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Due to the great pressure of rare earth mining on environmental governance and the policy control of strategic resources, the increment of domestic rare earth mining index is limited, it is difficult to match the downstream demand of rare earth products expanding year by year, and separation enterprises rely more on imported rare earth mines. In 2021, a total of 76000 tons of foreign mines were imported, including 56000 tons of light rare earth mines from the United States and 14000 tons of medium and heavy rare earth mines from Myanmar. The production capacity of MP mines in the United States is close to full capacity, and there is limited room for import growth. Myanmar has been closed since July because of the epidemic, and overseas mineral supply has shrunk.

According to the supply and demand balance of praseodymium and neodymium oxide in the next five years, if the wind turbine waste materials are fully utilized, it can fill the gap between domestic supply and demand in the next two to three years. The recycling industry of waste permanent magnet motors is mainly concentrated in China, and the recycling market of imported waste motors has a broad prospect. At present, the amount of NdFeB separation in the recovery of imported wind turbine waste is 2000 tons per month, equivalent to 732 tons of praseodymium and neodymium oxide, which is only being done by a few large waste factories. The dismantling market is still a blue sea.

The spot supply of praseodymium and neodymium oxide is still tight in the fourth quarter, and prices are vulnerable to market panic caused by imported rare earth products from Myanmar. SMM expects the spot transaction price in December to run at an overall high of 78-870000 yuan / ton, which may be adjusted briefly under financial pressure. The sharp rise in prices is not conducive to improving downstream acceptance of prices. NdFeB accounts for a relatively high cost in downstream wind turbines, variable frequency air conditioners and other industries, price increases are transmitted downstream, profit margins are compressed, withdrawal increases, demand shrinks, reacting upstream.