Why PrNd Oxide Prices Outperformed the Rare Earth Market?

SHANGHAI, Dec 1 (SMM) - If you have been observing the rare earth market for some time, you will find that PrNd oxide is always the thriving one with prices moving all the way up. For instance, the average spot price of SMM PrNd oxide stood at 857,500 yuan/mt on December 1, an increase of 110% from the beginning of the year.

In addition, the transaction prices of rare earth auctions continued to rise. On November 17, in the special auction at Baotou Rare Earth Exchange for 4 bids totalling 20 mt, the prices of PrNd alloy all reached a high of 930,000 yuan/mt, an increase of 7% from 873,000 yuan/mt in early November. Although the continuous price hike has brought obvious cost pressure to the downstream, the prices of PrNd oxide are expected to remain strong in the fourth quarter due to the strong demand and tight supply in sectors like new energy vehicles, wind turbines, industrial motors.

Why is PrNd oxide so popular in the market? On the one hand, the values of PrNd oxide continue to improve. One of the reasons is that the PrNd oxide is playing an increasingly important role in the domestic economic structure. Meanwhile, it is also a concrete manifestation of the supply and demand pattern in the rare earth market. The favourable national policies have boosted the rare earth market as a whole, and the demand from rare earth downstream industries is very strong, driving the price of PrNd oxide to rise further. On the other hand, emerging business sectors have strong demand for PrNd oxide. New energy vehicles, wind turbines, energy-saving appliances, and smart robots are expected to develop and lead the application of PrNd oxide. It is estimated that by 2025, with the increase in penetration rate, the demand for PrNd oxide will grow by more than 80,000 mt.

The latest statistics from some organisations show that in October, the supply of chips increased by about 10% month-on-month, and retail sales of passenger vehicles in the narrow sense are expected to be 1.72 million units in the month, an increase of 8.8% from September. In addition, the total sales of passenger vehicles from January to October rose by 1.24 million units from 2020. Among them, new energy vehicles contributed an increase of 1.57 million units, accounting for 126% of the total increase, showing that new energy vehicles are becoming the main driving force in the automobile sector.

As the amount of PrNd oxide used by new energy vehicles is 3 to 5 times that of traditional vehicles, the rapid growth of new energy vehicles will greatly drive the demand for rare earth. With the recent easing of power rationing and seasonal high effects, the demand is expected to grow further, hence pushing up the prices.

Since the beginning of this year, the cumulative increase of PrNd oxide prices has exceeded 90%. Furthermore, while the prices of PrNd oxide are soaring, the market supply has been quite tight. For example, the mainstream PrNd oxide enterprises have already been producing at full capacity with more new orders coming in. The prices of PrNd oxide have been moving all the way up throughout 2021, even surpassing that of dysprosium oxide, which means that related companies will become the biggest winners in this round of price surges. For example, North Rare Earth Co. produces about 10,000 mt of PrNd oxide per year. Due to the rising prices of PrNd products, the company's annual profit has increased by at least 2.5 billion yuan.

What’s more, considering that the global COVID pandemic will be brought under control in 2022, a scenario of sustained economic recovery will surface itself. It is expected that in 2022, the consumption of PrNd oxide will increase by at least 15%, or 63,000 mt. Some analysts predict that the prices of PrNd oxide are likely to stay above 800,000 yuan/mt. The reason is that the prosperity in sectors like automobile, robots and mobile phones will boost the demand for PrNd oxide, hence the prices will climb inevitably.

In 2021, China's economy has been recovering steadily, and the supply and demand pattern has been running smoothly, laying a solid foundation for the continued increase in the prices of rare earth materials such as PrNd oxide in 2022. With the implementation of policies such as the Regulations on the Management of Rare Earth and the gradual introduction of new policies this year, it is expected that the high-quality development of the rare earth industry in the medium and long-term will be guaranteed and the prices of rare earth such as PrNd oxide will continue to rise.