I. July NdFeB Core Support Segments Production All Declined, Demand Entered Phase Contraction
In July, China's NdFeB downstream core support segments weakened simultaneously. Major end-use markets including NEV, air conditioners, and washing machines all showed a MoM pullback or slowdown in pace, causing NdFeB rigid demand support capacity to contract notably from H1. Based on the current situation, the demand decline in July was not merely a single industry chain fluctuation but a combined effect of the entire NdFeB demand base. The synchronized downturns in automotive main drive, complete air conditioner units, and related home appliance chains resulted in a pattern for July where magnetic material enterprises mainly took orders for small-batch rigid demand, with weak willingness for proactive restocking.
Specifically, NEV production and sales in July reached 1.576 million units and 1.561 million units, up 26.8% YoY and 23.7% YoY respectively, corresponding to NdFeB consumption of 6,660.7 mt. The YoY growth still provided a base but showed no MoM expansion. Air conditioner production stood at 18.034 million units, down 29.6% MoM, consuming 1,642.5 mt of NdFeB. Washing machine exports reached 8.999 million units, down 8.7% MoM, consuming 1,912.59 mt of NdFeB, with exports of 3.02 million units accounting for about 35%, and the export pace slowed. The combined consumption volume of the above segments was notably narrower than the monthly average in H1, directly marking NdFeB demand entering a phase low.
II. Automotive Side: Domestic Off-Season Outweighed Export Surge, Magnetic Material Orders Did Not Receive Concentrated Add-on Orders
Although NEVs maintained positive YoY growth, July saw natural declines in terminal traffic and orders, compounded by some demand being released ahead of time due to H1 sales push, as well as persistent high temperatures nationwide and typhoon and flood disasters in some regions affecting offline sales, resulting in a typical seasonal weakening MoM. Automakers maintained basic production schedules but did not transmit concentrated add-on signals to the magnetic material side — the monthly consumption volume of 6,660.7 mt reflected that main drive motor demand still had a base, but it was not enough to offset the MoM decline in other core downstream sectors.
Overall automotive export data were impressive: July auto exports reached 1.043 million units, up 0.6% MoM and 81.3% YoY, of which NEV exports were 553,000 units, up 5.7% MoM and 1.5 times YoY. However, the current realization of NdFeB demand was more closely tied to China domestic vehicle production schedules and magnetic material delivery cycles. The export surge did not reverse the weakening offline conversion caused by extreme weather in the domestic sales side in July. Even NEV manufacturers with strong exports adopted a cautious approach to supply chain stockpiling, making it harder for the magnetic material intermediate link to independently amplify procurement.
Entering August, NEV production is expected to be 1.599 million units, with growth only possible from "a small amount of stockpiling at month-end driving production growth" — the first to mid of August remain in the tail of the off-season. Magnetic material factories' purchases of Pr-Nd raw materials are more driven by long-term contracts and consuming existing inventory. Trading of conventional grade blanks is sluggish, while high-end high-temperature resistant grades maintain bargaining power due to new car models and high-voltage platforms, but the total volume has not formed a force to pull the NdFeB demand curve back to H1 highs.
III. Home Appliance Side: Abnormal Weather + Proactive Destocking, Air Conditioner Peak Season Suden Cold Dragged Down NdFeB Rigid Demand
Another key factor that "thinned" NdFeB demand in July was the air conditioner and related white goods chain. Widespread rainfall across the country that month, frequent precipitation in north China and northeast China, and successive typhoons in east China and south China. The pattern of "more rain in north and south, less rain in central China" directly disrupted the traditional peak season sales pace of air conditioners — terminal traffic and installation conditions were simultaneously limited, dealers had very low willingness to stockpile, and producers turned to proactive destocking, causing complete machine production to drop nearly 30% MoM. Air conditioner exports also did not provide compensation; the export pace was also cautiously managed. In August, air conditioner production is expected to be 16.98 million units and washing machine production 9.2 million units, showing marginal recovery from July's domestic sales low, but against a backdrop of high costs and involution in terminal prices, enterprises' net profit is under pressure. Their attitude of proactive contraction in production has not changed, with producers still prioritizing production control and destocking.
Washing machine exports were 3.02 million units, accounting for about 35%, and the slowdown in export pace further confirmed the uneven release of overseas home appliance demand. Current overseas procurement is not a comprehensive withdrawal of orders, but constrained by uncertainties in global circulation regarding policies and freight rates, as well as some demand having been released ahead of time. The marginal growth provided to NdFeB by the export side is "resilient but not continuous", making it difficult to act as a reversal factor when domestic sales suddenly cooled in July. Small and medium-sized magnetic material enterprises saw a notable decline in operating rates due to the downstream off-season, while large leading companies maintained their base with high-end motors and long-term contract orders. The entire industry postponed stockpiling actions — first consuming existing inventory, then waiting for price and order signals.
IV. August Shows Obvious Transition Characteristics; Traditional "September-October Peak Season" Likely Postponed
Considering all segments, SMM believes that August NdFeB overall presents a transition pattern of "small overseas growth, no domestic sales reversal". Within the boundaries provided, August exports are expected to be 5,500 mt, indicating that overseas demand indeed has a small marginal improvement, especially with NEV exports and some overseas long-term contracts contributing a stable portion. However, aside from small overseas growth, on the domestic sales side, air conditioner destocking continues, automotive stockpiling only starts at month-end, and washing machine export pace has not improved. None of these provide sufficient thickness for secondary amplification. High costs combined with involution in terminal prices mean magnetic material enterprises are unwilling to blindly expand stockpiles at high raw material prices. Upstream smelting sides have limited willingness to concede due to cost elasticity constraints. The price bottom has support, but before concentrated buying forms on the demand side, both NdFeB blanks and oxides will find it hard to form a trend out of single-month export figures.
From this, deducing to the seasonal rhythm, the traditional "September-October peak season" faces a delayed realization window this year. In previous years, the peak season relied on solid orders and stockpiling from downstream from mid-August to September — NEVs rushing yearly targets, wind power and industrial motors locking in raw materials in advance, home appliances stockpiling for year-end sales — only then would Pr-Nd procurement and NdFeB blank production schedules be pushed higher. This year, the production decline in core support segments in July has already led to reduced demand. In August, only small overseas growth is seen, with domestic sales supported by a small amount of month-end stockpiling. Thus, in the first to mid of August, magnetic material factories are more likely to continue maintaining low inventory and small-lot rigid demand orders. If concentrated stockpiling signals do not appear until late August or even later, then September may not immediately see a simultaneous jump in orders and prices. The "September peak season" will be weakened, and the "October peak season" may also be postponed to a later phased recovery.
SMM believes that the current situation is not a destruction of the medium- and long-term demand logic. The seasonal changes in the pillar industries of the traditional magnetic material industry have not changed. Rather, it is an inevitable result of the post-pandemic consumer market sluggishness compounded by increased domestic competitive pressure, from geopolitical to international situations. Going forward, SMM will continue to monitor changes in the end-use market and the magnetic material market.
