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Rare Earth Supply Tightness May Intensify after CNY Holiday
Jan 19, 2022 18:15CST
Source:SMM
The upstream supply of rare earths continued to be tight. In terms of ore imports, the enterprises in south China are more dependent on ores imported from Myanmar. However, as the COVID-19 pandemic situation in Myanmar has been worrying, the ore traders were pessimistic about the re-opening of the China-Myanmar boarder port in the first quarter of 2022, and they were less interest in selling rare earth ores from Myanmar.

SHANGHAI, Jan 19 (SMM) - The upstream supply of rare earths continued to be tight. In terms of ore imports, the enterprises in south China are more dependent on ores imported from Myanmar. However, as the COVID-19 pandemic situation in Myanmar has been worrying, the ore traders were pessimistic about the re-opening of the China-Myanmar boarder port in the first quarter of 2022, and they were reluctant in selling rare earth ores imported from Myanmar.

The supply of scrap was also tight. NdFeB scrap accounts for 38%-40% of the supply of upstream rare earth oxide. Nonetheless, scrap enterprises were facing multiple difficulties including operating losses and short supply of spot scrap. Some scrap enterprises were planning to conduct routine maintenance after the Spring Festival holiday, hence the scrap supply in February is likely to drop by 20%-30%. Meanwhile, there will be no added supplies from the domestic mining end post the holiday, and the supply of imported rare earth ore and NdFeB scrap will also tighten. As such, the supply tightness of rare earth ore is expected to intensify in February.

Downstream demand for medium and high-end NdFeB from fields like new energy vehicles, wind power generation and two-wheeled electric vehicles has been quite strong. And large-sized magnet enterprises had sufficient overseas orders. Some of the rare earth metal stocks of magnet enterprises were already exhausted, and the market demand has been resumed since the beginning of January. In addition, China Rare Earth Group may need to build the stocks. The supply and demand gap in the rare earth market will expand further in February.

Some enterprises were bullish for the market post the Spring Festival holiday, and rushed to make purchases before the logistics were out of services for fear of further price hikes, even as the prices have been rising recently. Meanwhile, the traders were reluctant to sell amid tight supplies of mainstream rare earth oxides and metal.

As of January 19, the mainstream transaction prices of PrNd oxide and metal were at 920,000-930,000 yuan/mt and 1.13 million yuan/mt respectively, with some metals being reported at 1.15 million yuan/mt.

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