SHANGHAI, Jul 19 (SMM) - In the first half of 2022, the rare earth market experienced frequent ups and downs. The prices of PrNd oxide recorded the low and high at 810,000 yuan/m and 1.1 million yuan/mt respectively, with a price spread of 290,000 yuan/mt.
In January and February, due to the tight supply, the low inventory held by separations companies, coupled with restocking demand of downstream magnetic material companies, pushed up rare earth products prices.
In March, the Rare Earth Regulation Office communicated with key market players regarding the prices of rare earth products, demanding that they shall not participate in market speculation. The pessimism emerged in the market, and the traders surrendered part of their profits to sell, pulling down the prices.
Affected by the pandemic in April and May, the orders placed by magnetic material enterprises decreased, driving down the operating rates as well as the supply of scrap. In addition, the supply of upstream ion ore was tight, and the scrap was also in short supply with prices remaining high. Rare earth prices were firm amid strong support from high cost and tight supply.
In June, the downstream demand was still weak with less orders from magnetic material enterprises, and the orders of some small and medium-sized magnetic material factories were reduced by 30%-40%. Rare earth prices declined amid sluggish demand.
The rare earth market remains sluggish in July, evidenced by accelerating price drops of mainstream rare earth products. The demand side is difficult to improve, and the market players are also waiting for a pivot in the price moves before purchasing, hence the transactions of rare earth oxides and metals are poor. On July 11, Northern Rare Earth announced the listing price of PrNd oxide at 812,600 yuan/mt, down 1,300 yuan/mt from June, and PrNd alloy at 990,500 yuan/mt, down 1,500 yuan/mte, which dampened the confidence of industry players. As of July 15, PrNd oxide and alloy prices were lowered to 840,000 yuan/mt and 1.03 million yuan/mt, which was close to the listing price.
At present, the rare earth market is still in the off-season, and short-term demand will hardly improve. The leading application fields of rare earths include new energy vehicles, wind power generation, green home appliances, and consumer electronics.
The output and sales of NEVs stood at 2.661 million units and 2.6 million units respectively, an increase of 1.2 times both year-on-year, with a market penetration rate of 21.6%. Affected by the pandemic, the production and sales of new energy vehicles in April fell by 33% and 38% month-on-month. As the pandemic situation improved, the new energy vehicle industry slowly recovered, and the production in May and June rose month-on-month. The state also provides subsidies for the purchase of new energy vehicles to stimulate the consumption. It is expected that the demand for rare earths in the new energy vehicle industry will increase in the second half of the year.
From January to June 2022, the cumulative bid volume of domestic wind power projects is 53.46GW, but the installed capacity from January to May is only 10.8GW. Due to poor profits, the willingness of equipment plants to purchase raw materials and install weakened, and the installed capacity in the first half of the year was constrained. At present, the average bid price has rebounded, and the demand for wind power is expected to be released in the second half of the year. In addition, some companies have different choices in models in consideration of profits, and other factors such as maintenance costs must also be comprehensively taken into account. Direct drive, semi-direct drive and doubly-fed generators demand magnetic steel with difference amount. Choosing semi-direct drive and doubly-fed generators can reduce costs.
Contained by the pandemic and the economic situation, industries such as consumer electronics and home appliances have been sluggish. For example, the renewal cycles of mobile phones and computers have become longer, and the consumers’ desire to purchase has declined. The real estate industry is in the downturn, and the demand for home appliances has also weakened. The state is trying to stimulate the consumption, but the recovery of the economy and the improvement of demand may be slow.
On the whole, the demand in the new energy vehicle industry may not be able to drive the rare earth market, and the overall demand for rare earth may continue to be moderate in the second half of the year.