SHANGHAI, Feb 14 (SMM) - The prices of mainstream rare earth products rose significantly in the fourth quarter of 2021 due to less orders taken. During this period, the magnetic material companies were in a strong wait-and-see mood and turned away from high prices of raw materials, resulting in bearish outlook on the prices of rare earth metals and other raw materials. Except for a few large-scale magnetic material enterprises that prepared three months of inventory, NdFeB magnetic material enterprises generally had low inventory by the end of 2021.
Wind turbines, new energy vehicles (NEVs) and other terminal fields posted strong demand post the Chinese New Year (CNY) holiday in 2022, and the orders rose. Large-scale magnetic material enterprises were flooded with orders.
In terms of rare earth ore supply, on January 28, the Ministry of Industry and Information Technology, the Ministry of Information Technology, and the Ministry of Natural Resources issued the first batch of rare earth mining and smelting/separation quotas that stood at 100,800 mt and 97,200 mt respectively in 2022. The light rare earth mining quota increased by 23.2% year-on-year, and the middle and heavy rare earth mining quota remained unchanged year-on-year. The separation/smelting quota rose by 20% year-on-year.
Although the first batch of rare earth quotas has been issued, the rainy season slowed down the mining of middle and heavy rare earths in south China. It is expected that the domestic supply of middle and heavy rare earth oxides from the separation of raw ore will hardly increase in the first quarter.
In terms of NdFeB scrap supply, scrap recyclers basically maintained normal production during the CNY holiday. Some scrap providers originally planned to suspend the production for maintenance in February. As the mainstream rare earth varieties extended their pre-holiday rally into after the holiday, the maintenance was delayed on supply pressures and lucrative profits.
Affected by the tight supply of NdFeB scrap before the CY, the operating rates of some scrap recyclers continued to drop to 60% from November last year. The scrap inventory of NdFeB magnet enterprises was basically consumed before the festival, and it is difficult to restock in February.
On February 11, Northern Rare Earth released the list prices. In order to stabilise the market sentiment, the prices of PrNd oxide and alloy were offered at 816,000 yuan/mt and 994,500 yuan/mt respectively, far lower than the market transaction prices. Since the auction of PrNd alloy on the Rare Earth Exchange was stopped, the spot supply of PrNd oxide and alloy in north China has been tight, and the market referred less to the list prices.
News such as the release of rare earth mining quotas and the list prices of rare earths by Northern Rare Earth could stabilise market sentiment, but they have little impact on oxide supply in the short term, and have an even weaker impact on the prices.
Under the premise that downstream procurement was made on demand and upstream supply will remain restricted, the supply rightness in the rare earth market will intensify in the first quarter. As such, the prices of mainstream varieties such as praseodymium and neodymium (PrNd), dysprosium, terbium, and gadolinium rose after the CNY holiday.
The intensifying supply tightness has cultivated have strong bullish sentiments among magnetic material companies regarding the prices of raw materials. Some magnetic material companies have fixed the prices with upstream companies, and the rare earth market contradiction has changed from the low acceptance of prices by the downstream to the supply tightness of rare earth.
If the prices increase too fast, it will have adverse effects on the industrial chain. The profits of the rare earth industry chain are mostly concentrated at the mining end. The rapid increase in the prices of mainstream rare earth products has created lucrative profits of raw ore mining, and there may be more illegitimate mining activities in south China. On the back of lower profits of the midstream manufacturing sector, the imported rare earth ore and private miners have grabbed considerable profits.
Going forward, the management of the mines is likely to be enhanced, so that the domestic rare earth mining sector will be the major source of supply with supplement of imported rare earth ores in order to raise the concentrate rate of profits across the rare earth industry chain. Illegitimate mining activities will be resolutely curbed.
![Rare Earth Prices Fell First and Then Rose, with Wide Swings in Pr-Nd, Dysprosium, and Terbium [SMM Rare Earth Weekly Review]](https://imgqn.smm.cn/usercenter/eUMRo20251217171745.jpeg)
