Scrap prices rise rapidly, with market procurement showing polarization [SMM analysis]

SMM reported on July 15: As of now, scrap prices have reached a new high. The price of Pr-Nd recycled from NdFeB scrap closed at 516-527 yuan/kg, with a daily increase of 22,000 yuan/mt. The price of dysprosium scrap closed at 1,643-1,654 yuan/kg; the price of terbium scrap closed at 5,439-5,550 yuan/kg; the price of gadolinium scrap closed at 89-110 yuan/kg; the price of holmium scrap closed at 222-233 yuan/kg. This was mainly driven by the increase in the oxide market.

It is reported that the current rise in oxides was driven by multiple positive factors. Firstly, an announcement from Bao Gang United Steel on Thursday afternoon stated that the price of concentrate would increase in Q3, leading to a rise in oxide costs. Supported by these costs, the market price of oxides increased. On Friday, stimulated by multiple positive factors such as the two consecutive trading days of limit-up for China Northern Rare Earth's stock and the rise in overseas rare earth raw material prices, the price of oxides continued to increase. Until Monday, influenced by the tight supply-demand pattern in the oxide market and the continuous fermentation of positive factors, the market price of oxides rose rapidly. Under the influence of the rapid rise in oxides, suppliers in the scrap market held an optimistic attitude towards future prices, believing that there would be no significant decline. There was a strong reluctance to sell in the market, making it difficult to conclude scrap purchases at low prices. Meanwhile, some recycling enterprises, influenced by fear of high prices, cautiously followed the price increase, making it difficult to conclude scrap purchases at high prices. This was mainly because the increase in oxides was supported by upstream factors, while downstream magnetic material enterprises' order situations could not support such high-priced Pr-Nd products. Lacking demand support, recycling enterprises worried that it would be difficult to sell Pr-Nd oxide after purchasing at high prices.

Affected by this, a two-tiered situation emerged in the recycling enterprises' scrap purchases. Large leading factories actively followed the price increase, raising their scrap quotes to adapt to market changes and ensure that scrap purchases were not affected by the reluctance to sell. However, small and medium-sized recycling enterprises believed that the price increase was too rapid and lacked demand support, so they were cautious in purchasing and adopted a wait-and-see attitude. As of now, transactions in the oxide market have stalled. Some suppliers, influenced by fear of high prices, have proactively lowered their quotes, and oxide prices have jumped initially and then pulled back. It is expected that in the short term, influenced by the initial jump and subsequent pullback in oxide prices, scrap prices will also experience a pullback.

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