SHANGHAI, Jun 6 (SMM) - Domestic rare earth ore separation enterprises in Inner Mongolia and Gaungdong maintained stable operating rates in May. It is understood that a large rare earth group company in Jiangsu was previously affected by the pandemic control measures, and its production was suspended in April. With the improvement of pandemic situation and the acceleration of full resumption of production, this company re-opened in May, and the operating rate has been raised to 25%. The import volume of rare earth metal ores declined, resulting in less supply of light rare earth ores in south China. Affected by this, the operating rates of some separation enterprises in Sichuan and Shandong fell.
With the absence of rare earth ore from Myanmar and ion ore in China, the supply shortage of ion ore in China intensified, and the market looked for sources other than ion ore. The market demand for rare earth chloride has been growing, and the operating rates of some monazite processing enterprises rose by 10 percentage points in May.
The supply of rare earth scrap tightened again in mid-May, and the quotations were firm. The prices of PrNd scrap stood at 900,000 yuan/mt before the Dragon Boat Festival, with a monthly price hike of 13%. Scrap recyclers are facing the problem of raw material inventory reduction and higher cost, and the overall operating rates dropped significantly. Some recyclers suspended the production. Only a few scrap recyclers affiliated to rare earth group companies and large-scale scrap recyclers maintained a healthy financial situation, stable supply channels of raw materials, and stable operating rates.
The operating rates of separation enterprises fell on the whole in May, and it is expected that the supply of rare earth oxides will be even tight in July.
Looking back to May, the operating rates of metal factories in Inner Mongolia declined as a whole, with some saw a reduction of as much as 20%. The operating rates of metal factories that focus on toll manufacturing were stable. The operating rates of some metal factories in Sichuan decreased slightly, and only very a few in Jiangxi increased the operating rates.
Although the resumption of work and production in the Yangtze River Delta region is in progress, the demand from terminal sectors such as new energy vehicle motors and wind turbines has not increased significantly. Based on the production data, the cumulative production of new energy vehicles in China from January to April was 1.597 million units, equalling to the demand for 5,600 mt of high-performance rare earth permanent magnets. Although the cumulative production of new energy vehicles from January to April increased by 112% year-on-year, the production of new energy vehicles in January, February and April all dropped month-on-month.
From January to April, the cumulative number of new tenders for wind turbines in China reached 40GW. If the installation process is smooth, it will bring 7,000 mt of high-performance rare earth permanent magnets. Although the bidding volume of wind turbines has increased significantly year-on-year, the newly installed capacity from January to April is still relatively low. The newly installed capacity of domestic wind turbines from January to April is 9.58 million kilowatts, which only generates the demand for 16,000 mt of high-performance rare earth permanent magnets.
In the case of poor order performance and the heavy financial pressure faced by magnetic material and metal enterprises, they only purchased raw materials on rigid demand. It is expected that metal output in May has dropped.
As the main producing areas of rare earth metals in China gradually enter the summer, the temperature of the electric furnace of metal enterprises will increase, and the production efficiency of PrNd alloy may change. In addition, equipment maintenance costs have increased, and it is expected that the operating rates of metal enterprises in Inner Mongolia, Jiangxi and other regions will fall slightly in June.
