Export licenses for at least six rare earth magnetic material enterprises have been approved! Industry insiders: It is expected that the increase in rare earth mining indicators this year will be approximately 3.7%.

It has been 45 days since export control measures were implemented for seven categories of medium-heavy rare earth-related items, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. A reporter from Cailian Press learned from the industry that at least six enterprises have already obtained the export licenses for dual-use rare earth substances (hereinafter referred to as "rare earth export licenses") issued by the Ministry of Commerce. Additionally, the approval process for rare earth export licenses for several publicly listed firms is continuously progressing.

As of May 18, enterprises that have obtained rare earth export licenses include at least six rare earth magnetic material enterprises, such as Zhongke Sanhuan (000970.SZ), Ningbo Yunsheng (600366.SH), Zhenghai Magnetic Material (300224.SZ), Tianhe Magnetic Material (603072.SH), Instar (301622.S), and Earth Panda (688077.SH). In addition, the rare earth export licenses of companies such as China Northern Rare Earth (600111.SH), Guangsheng Nonferrous Metals (600259.SH), and Innuovo (000795.SZ) are currently under application.

Due to restrictions imposed by policies, market conditions, production and transportation factors, the supply of rare earths on the supply side may experience a certain degree of reduction in the short term. However, at the same time, downstream demand has entered the off-season. The industry expects that rare earth prices will not experience significant fluctuations throughout the year.

At least six rare earth magnetic material enterprises have obtained individual licenses

In April this year, the Ministry of Commerce and the General Administration of Customs jointly implemented export controls on seven categories of medium-heavy rare earth-related items, including samarium, gadolinium, terbium, dysprosium, etc., covering various forms such as metals, alloys, and permanent magnet materials. These seven categories of medium-heavy rare earth-related items have also become the first dual-use substances to be explicitly included in export controls.

"As the dominant player in the global rare earth supply chain, China controls approximately 85% of the global smelting capacity. These control measures have directly led to an expansion of the supply gap for medium-heavy rare earths in overseas markets, with significant impacts particularly on key varieties such as dysprosium and terbium," Yang Jiawen, a rare earth analyst at SMM (Shanghai Metals Market), told a reporter from Cailian Press. "According to our understanding, as of late April, the prices of dysprosium and terbium in Europe have already doubled or tripled."

Industry insiders told a reporter from Cailian Press that under the current circumstances, all export orders for products containing the aforementioned seven categories of medium-heavy rare earth-related items must be reported to the Ministry of Commerce and can only be exported after approval. According to the "Regulations on the Export Control of Dual-Use Items," the current review period for export license applications for dual-use rare earth items is generally 45-60 working days.

"If unexpected situations arise, the period may be longer," a relevant person from Tianhe Magnetic Material told a reporter from Cailian Press. "The first batch of goods that our company has obtained approval for is to be delivered to Volkswagen."Currently, a "formula" requires a separate application. If the content of rare earth elements in the product differs, a new application must be submitted. If there are other new orders subsequently, they will continue to be queued for submission."

"According to the announcement on export controls for seven categories of medium-heavy rare earths issued by the Ministry of Commerce and the General Administration of Customs on April 4, our company does have some products containing dysprosium and terbium that fall under the control scope. We have applied for dual-use export licenses as required. The licenses are managed on a one-batch-one-license basis, and secondary use is prohibited. Currently, the company has gradually obtained some licenses, and the relevant processes are progressing smoothly," said a representative from Insteel to a reporter from Cailian Press.

A representative from Sanhuan Magnetics also stated to a reporter from Cailian Press that the company submitted declarations as soon as the export control measures were introduced. Currently, a small number of orders have been approved, and the export licenses for more orders are still under review. "They are declared order by order and then approved order by order. If the materials are incomplete, they will be rejected, and the submission process will continue, which will extend the entire declaration cycle."

It is worth noting that several publicly listed firms in the rare earth permanent magnet sector told reporters from Cailian Press that due to the approval cycle for rare earth export licenses, the companies' performance in the first half of this year may be affected to a certain extent. "Before the introduction of rare earth export control measures, export orders could confirm revenue within a relatively short period; now, this cycle will be prolonged, which may affect the performance in the first half of the year."

A representative from Ningbo Yunsheng stated that currently, only products containing items related to the aforementioned seven categories of medium-heavy rare earths require review. Products from the company that do not contain the aforementioned seven elements are being delivered normally.

It is estimated that the increase in rare earth mining quotas this year will be around 3.7%.

In addition to the implementation of export controls on seven categories of medium-heavy rare earth-related items, this year's domestic total control indicators for rare earth mining are also "on the nerves" of the global market. As of now, the first batch of total control indicators for rare earth mining this year has not yet been issued, whereas the first batch of total control indicators for rare earth mining and smelting and separation in 2024 was issued on February 7 last year. In comparison, this year's first batch of rare earth indicators is already "three months late."

The industry believes that the delay in the issuance of this year's first batch of total control indicators for rare earth mining may be related to factors such as the current complex international situation, weak downstream demand, and the inclusion of imported ore in the scope of quota management.

At a special live broadcast on rare earth market trends held by SMM recently, Yang Jiawen said, "Based on an analysis of the current market situation, SMM expects that the combined total of the two batches of rare earth mining quotas in 2025 will reach 280,000 mt, with a year-on-year increase of approximately 3.7%."Of this total, 261,000 mt were rock-ore type rare earths, representing an approximate YoY increase of 4%, while 19,000 mt were ion-adsorption type rare earths, maintaining the same level YoY."

In Yang Jiawen's view, since the beginning of this year, the supply of rare earth raw materials has remained tight. Meanwhile, the rise of industries such as humanoid robots and the low-altitude economy has brought new demand to the rare earth sector. This year, the global supply-demand gap for Pr-Nd oxide is expected to be 3,500 mt. The improvement in the supply-demand relationship will further support the rebound in rare earth prices. With the regulation of a series of rare earth industry policies, it is expected that the price fluctuation range of Pr-Nd alloy will be controlled within 100,000 yuan/mt, which will help ensure the stability of the profit margin of Pr-Nd alloy.

Supply side, the ion-adsorption ore in Myanmar has resumed production, but it is currently the rainy season, affecting the transportation of Myanmar ore. Suppliers at the ore end have shown a significant increase in reluctance to sell. At the same time, downstream NdFeB enterprises have entered the off-season for taking orders, and metal plants in some regions have begun to shut down furnaces and cut production. It is expected that there will be no significant increase in short-term end-use demand in the near future.

Huang Ping, the general manager of Shenghe Resources, stated at the 2024 Annual Performance Briefing held recently that despite recent concerns about overall consumer demand triggered by factors such as tariff hikes, which have led to some price corrections in major rare earth products, the decline has been limited. With the gradual clarification of policies, the market outlook is expected to improve. The company's capacity utilisation rate for rare earth smelting and separation, as well as metal processing, remains high.