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At the 2021 China International Motor Industry chain Annual meeting hosted by Shanghai Nonferrous Network (SMM), SMM rare earth analyst Yang Wenhua brought the analysis and market prospect of China's rare earth permanent magnet industry from 2021 to 2022. SMM said that at the end of 2021, the price of praseodymium-neodymium oxide reached 84.5-850000 yuan / ton, terbium oxide 1110-11.3 million yuan / ton, and dysprosium oxide 288-2.9 million yuan / ton, up 174%, 283% and 139% respectively over 2019. With the promotion of carbon neutralization and carbon peak policies at home and abroad, the improvement of consumption level and the transformation of market consumption concept to energy conservation and emission reduction, the demand for new energy vehicles and wind power generation in the main application areas downstream of rare earth products has increased significantly from 2020 to 2021.
General situation of rare earths
The national rare earth mining target in 2021 is 168000 tons, an increase of 28000 tons over 2020. The smelting separation index is 162000 tons, an increase of 27000 tons over 2020. Among them, the rare earth mineral index of ionic type (mainly medium and heavy rare earths) is 19150 tons, which has not increased for three consecutive years. The index of rock-mineral type (light) rare earth ore is 148850 tons, an increase of 20% over last year.
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Generally speaking, the total amount control plan of light rare earths in China has a tendency to be gradually liberalized, achieving growth for three consecutive years.
From 2019 to 2021, the annual compound growth rate of rare earth mining index is 12.8%. From the type of light rare earth ore, the continuous increase index is light rare earth ore; from the year point of view, the increment of rare earth mining index in 2021 is the largest; from the point of view of the enterprises with index distribution, the growth rate of rare earth mining index of Northern rare Earth Group is the largest.
The situation is very similar to that of mines, and the increments are all in light rare earth products.
Why are the increments all light rare earth indicators?
The reason for the total growth: China is very rich in light rare earth resources while medium and heavy rare earths are relatively scarce. However, under the substantial demand of new energy vehicles and wind power installations for downstream permanent magnet materials, the mining index must be increased.
The reasons for increasing the number of light rare earth ores rather than medium and heavy rare earth ores are as follows: first, rare earth as a strategic resource should not be over-exploited. Medium and heavy rare earth ores contain more elements than light rare earth ores and need to be protected. Second, the environmental pollution caused by the mining of medium and heavy rare earths is difficult to control. From the point of view of environmental protection, the mining volume of medium and heavy rare earth mines has not been released for the time being.
The domestic rare earth mining index is not fully liberalized, which can not meet the growing downstream demand, there is a gap between supply and demand, and the domestic dependence on imported rare earth mines is large.
The imported rare earth ores mainly include mixed rare earth carbonate, unlisted rare earth oxide and rare earth metal ore. The first two are mainly from Myanmar, while the rare earth metal deposits are mainly from the MP mine in the United States.
China's rare earth mine imports showed an overall growth trend from 2018 to 2021. Due to the near full production capacity of MP mines in the United States, the growth rate of rare earth metal ore imports from the United States slowed down; the import structure of rare earth mines in Myanmar changed, and the proportion of mixed rare earth carbonate decreased year by year, while the proportion of unlisted rare earth oxides increased year by year.
Affected by Myanmar's customs closure, Myanmar's rare earth mineral imports declined slightly month-on-month in 2021.
The main use areas of mixed rare earth carbonate and unlisted rare earth oxide in China are Jiangxi, Zhejiang, Hunan, Guangdong, Guangxi and other southern regions.
From January to November 2021, China imported 4348 tons of mixed rare earth carbonate, down 47 per cent from the same period last year. The reduction is basically the part of rare earth carbonate mines that originally came from Myanmar.
Due to the impact of the epidemic, Myanmar began to close customs in July 2021 and lasted until November. After that, the gate was opened for less than a month, and it was closed again in December. The market is pessimistic about the opening of the border crossing between China and Myanmar in 2022, and the market attention of other overseas rare earth mines in production projects has increased.
From January to November 2021, China imported 18000 tons of unlisted rare earth oxides, a slight increase of 1.6 per cent over the same period last year. Nearly 90% of unlisted rare earth oxides come from Myanmar. After Myanmar closed customs for half a year in 2021, exports of unlisted rare earth oxides to China increased rather than decreased. Among them, SMM learned that the export structure of Myanmar's rare earth products has changed quietly in recent years: mixed rare earths from primary raw materials are declining, on the contrary, unlisted rare earth oxides after further processing are more favored by importers.
Therefore, it can be considered that this is a change in the structure of imported products.
According to the import of rare earth metal mines in the United States, the main use areas of rare earth metal mines in China are Inner Mongolia, Shandong, Sichuan and other northern and southwestern regions. The structure of China's rare earth industry shows a pattern of "one south, one north, one south and one north".
Imports of rare earth metal minerals from January to November in 2021 were 71000 tons, an increase of 11.1% over the same period last year. China's imports of rare earth metal mines increased significantly from 2018 to 2021, and the growth rate of rare earth metal ore imports slowed as the MP mine production capacity was close to full capacity.
Downstream consumption of rare earths
In the downstream consumption of rare earth products, there are mainly permanent magnet materials, metallurgical machinery, petrochemical industry, polishing materials, glass ceramics, hydrogen storage, catalysis, luminous materials and so on.
Among them, the largest consumption is in the field of permanent magnet materials, accounting for 43% of China's rare earth consumption.
In various terminal fields of permanent magnet materials, we are usually divided into traditional cars, wind power, new energy vehicles, energy-saving elevators, and so on. Among them, traditional cars account for 29% of the consumption of permanent magnet materials, wind power accounts for 29%, new energy vehicles account for 13%, and energy-saving elevators account for 8%.
In 2021, the output of new energy vehicles reached 3.36 million, an increase of 160% over the same period last year. Pure electric passenger cars are still the mainstream models of new energy vehicles. In 2021, 12000 tons of high-performance NdFeB will be generated in the field of new energy vehicles.
According to the Automotive medium-and long-term Development Plan, the average fuel consumption of new passenger cars in China will be 20% lower than that in 2020 by 2025. The 2020 New Energy vehicle Industry Development Plan (2021-2035) also proposes that the sales of new energy vehicles in China will reach about 20% of the total new car sales by 2025. After 15 years of efforts, pure electric vehicles will become the mainstream of new sales of vehicles and improve the efficiency of energy saving and emission reduction.
The penetration rate of the domestic new energy vehicle market is less than 20%. 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 have ushered in a period of rapid growth.
Overseas new energy vehicle subsidy policy also drives the purchase demand. In recent years, the European Union has raised the 2030 greenhouse gas emission reduction target from 40% to 60% through the European Climate Target Plan 2030. In addition, since 2020, European countries have increased subsidies for new energy vehicles, such as France increasing car purchase and replacement subsidies, Germany launched a 130 billion yuan stimulus plan to increase subsidies for electric vehicles by 4000 euros, and plans to extend the subsidy policy for electric vehicles until the end of 2025. The Netherlands, Britain, Greece, Italy and other countries have vigorously promoted the subsidy policy for electric vehicles, which will directly stimulate the sales of new energy vehicles.
It is estimated that by 2025, China's new energy vehicle production will reach a compound annual growth rate of 24%. By 2025, the total production of new energy vehicles will reach 7.93 million, and the new demand for high-performance NdFeB will be 26700 tons.
The era of carbon neutrality has begun. The Beijing Declaration on Wind Energy in October 2020 proposes to formulate a "14th five-year" wind power development plan to adapt to the goal of carbon neutralization, and to ensure that the annual installed capacity of wind power will not be less than 50 million kilowatts by 2025, directly driving the demand for rare earth permanent magnet downstream wind turbines.
The annual compound growth rate of wind turbine installed capacity from 2018 to 2021 is 36.2%.
Affected by the grid-connected period of wind turbines at the end of 2020, and the remaining non-grid-connected projects in previous years, the newly installed capacity reached 71.67 gigawatts in 2020, a sharp increase of 175% over the same period last year. The installed capacity of wind power will reach 21 gigawatts from January to October in 2021, down 70% from the same period last year. Although the installed capacity is significantly lower than that in 2020, it is still the top three newly installed since 2017.
The demand for NdFeB per unit of wind power installation is 695kg / MW, and the demand for NdFeB for new wind turbine installation in 2021 is 5000 tons. China's wind power has the basis for the transformation from "supplementary energy" to "alternative energy", and is developing in the direction of leading energy.
The target of carbon peak will be achieved in 2030, and the growth rate of wind power installation will be accelerated. It is expected that the compound annual growth rate in the next five years will increase from 36.2% to 40%. In 2025, the installed capacity of wind power will reach 82GW, and the annual demand for high-performance NdFeB is expected to be 23000 tons.
Rare earth export market
China is currently the world's largest producer of rare earth permanent magnet products, and its output has basically remained at more than 90% of the global total in recent years. Export is one of the main sales channels of rare earth permanent magnet products in China.
China's rare earth permanent magnet products are mainly exported in the form of rare earth permanent magnet, NdFeB magnetic powder, rapidly solidified permanent magnet and other NdFeB alloys.
Among them, rare earth permanent magnet is the main export form of rare earth permanent magnet products in China, accounting for nearly 90%. At the same time, rare earth permanent magnet currently enjoys preferential export tax rebate policy of customs.
The total export volume of China's permanent magnet products in 2021 is expected to be 55000 tons, an increase of 34.7% over 2020. With the easing of the overseas epidemic in 2021, the recovery of production and the growth of procurement demand of overseas downstream enterprises are one of the major reasons for the substantial increase in China's rare earth permanent magnet exports.
Europe, the United States and East Asia have always been the main export markets for China's rare earth permanent magnet products. As far as permanent magnets are concerned, the total exports of the top 10 countries in 2020 exceeded 30, 000 tons, accounting for 85% of the total. The total export volume of the top five countries exceeded 22000 tons, accounting for 63% of the total. The export market concentration of rare earth permanent magnets is high.
Compared with rare earth permanent magnets, the export market of rapidly solidified permanent magnetic sheets and NdFeB magnetic powder is more concentrated, mainly in Japan and Germany, of which the proportion of rapidly solidified permanent magnetic sheets and NdFeB magnetic powder exported to Japan in 2020 reached 98.05% and 70.66%, respectively.
From the perspective of exports to major trading partners, a large number of China's rare earth permanent magnet products have been exported to Europe, the United States and East Asia, most of which are developed countries with a high level of science and technology. taking the export data in 2020 as an example, the top five countries are Germany (15%), the United States (14%), South Korea (10%), Vietnam and Thailand. Rare earth permanent magnets exported to Southeast Asia eventually go to Europe and the United States.
Domestic rare earth ore end supply
The increment of domestic rare earth mine end supply is limited, so it is difficult to match the downstream demand of rare earth products expanding year by year. On the contrary, the domestic waste recycling market has broad prospects for development. Waste recycling market is divided into NdFeB waste recycling and waste motor disassembly recycling market. At present, NdFeB waste recovery, domestic mining of light rare earth ores and imported ores constitute the upstream supply end of the rare earth industry, and the mainstream rare earth oxides from NdFeB waste account for about 30% of the total market. The disassembly market of waste motors is still a blue sea, and only a few large waste recycling enterprises are doing it.
Domestic NdFeB waste recycling enterprises are mainly distributed in Jiangxi, Zhejiang, Jiangsu, Guangdong and other places, including Ji'an Xintai, Zhongli Tianma, Ganzhou Qiandong, Jiangxi Chengguang and so on. The recycling utilization of rare earths and downstream products in China is about 20,000 tons per year.
Taking Xintai Technology, a leading rare earth recycling enterprise, as an example, it mainly uses NdFeB recycled materials and phosphor waste to produce rare earth oxides, including praseodymium oxide, neodymium oxide, praseodymium neodymium oxide, etc., which are widely used in magnetic materials, computers, communication equipment, tricolor phosphors and other high-tech fields.
In November 2021, the Ministry of Industry and Information Technology issued the Motor Energy efficiency improvement Plan, which proposed to improve the recycling system of waste motors to provide new supply increments for the rare earth industry. Compared with the NdFeB waste recycling process, increasing the disassembly and crushing process, the domestic waste enterprises have lower technical barriers to transform and upgrade to the direction of waste motor recycling. In foreign countries, due to the immature waste recovery technology and strict environmental supervision, waste motors are mostly disposed of by waste products, and the price is low, so the cost advantage of imported waste motor recycling appears. At present, the disassembly of waste motors is dominated by wind turbines, and the service life of wind turbines is 15-20 years. The first batch of wind turbines installed in the world in 2001 have been faced with disassembly and recycling. It is estimated that the disassembly market of waste motors in China will produce at least 29000 tons of NdFeB supply from 2021 to 2025.
The significance of the Establishment of China rare Earth Group
China is in a low value-added processing link in the rare earth industry chain, with meagre profits.
From the point of view of the profit distribution of the rare earth industry chain, Japan, Europe and the United States and other countries and regions are relatively concentrated in the terminal technology patents and intellectual property rights of the industrial chain such as new energy vehicles and wind power generation, and are at the high value-added end of the industrial chain. it is in a high profit position in the whole industry chain, and the proportion of profit distribution is high. For a long time, China has been in the position of global supplier of rare earth raw materials, mainly processing and manufacturing, at the low value-added end of the rare earth industry chain, and at the low profit level in the whole industry chain. Domestic rare earth upstream processing industry and its auxiliary materials and other supporting industries are mature, compared with foreign countries, the domestic production cost advantage is significant. However, the price of rare earth products in China has always been on the low side, compared with the terminal of the rare earth industry chain, the profits of processing enterprises in the upper reaches of the industrial chain are meagre.
The concentration of rare earth upstream industry in China has increased, the management system is sound, and the pricing power of rare earths is gradually concentrated.
As a non-renewable strategic resource, in March 2021, the Ministry of Industry and Information Technology said that "China's rare earths did not sell at a rare price, but at a 'local' price," which was seen as a sign of upheaval in the industry. On September 23, China Minmetals Group and Chinalco issued a strategic restructuring announcement. On December 23, the China rare Earth Group, jointly established by China Minmetals, China Aluminum Corporation and Ganzhou rare Earth Group, was established, and the pattern of the rare earth industry in the south and the north was accelerated. By the unified management of large groups, the market management efficiency of the rare earth industry has been improved. In the follow-up, complete rare earth regulations may be issued, policies such as rare earth import and export may be improved, the crackdown on black rare earth ores may be expanded by improving industry norms, and pricing power will be further concentrated to stabilize prices, so as to enhance downstream acceptance of prices, avoid market adverse selection caused by excessive increases in raw material prices, and shift the focus of production enterprises to looking for low-cost substitutes for raw materials.
Summary
At the end of 2021, the price of praseodymium and neodymium oxide reached 84.5-850000 yuan / ton, terbium oxide 1110-11.3 million yuan / ton, and dysprosium oxide 288-2.9 million yuan / ton, up 174%, 283% and 139% respectively over 2019.
With the promotion of carbon neutralization and carbon peak policies at home and abroad, the improvement of consumption level and the transformation of market consumption concept to energy conservation and emission reduction, the demand for new energy vehicles and wind power generation in the main application areas downstream of rare earth products has increased significantly from 2020 to 2021.
The fourth quarter is the peak season of domestic and foreign downstream replenishment procurement demand, coupled with the increase in domestic rare earth ore supply shortage at the beginning of the year, and the gap between supply and demand widens. The prices of praseodymium neodymium oxide, terbium oxide and dysprosium oxide, the main rare earth products, continued to rise in 2020 and the fourth quarter of 2021.
For queries, please contact William Gu at williamgu@smm.cn
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