Rare earth prices fell in May, oxide output may continue to shrink [SMM Monthly Analysis]

The key factor that drove the rare earth price rally in April, the full production schedule of magnetic material plants, changed in May. The operating rates of magnetic material plants in May fell MoM compared to April. Concerns about orders as the off-season approaches prevented rare earth prices from continuing the rally seen in April. Rare earth prices fluctuated frequently, ultimately ending May with a slight decline. Praseodymium-neodymium oxide prices fell 8.55% in May, dysprosium oxide prices fell 5.15%, and terbium oxide prices fell 9.67%. It is worth noting that some separation enterprises in Jiangxi halted production due to environmental protection issues, leading to a decline in praseodymium-neodymium oxide output.

Praseodymium-neodymium oxide prices fell 8.55% in May, and output decreased by 1.3% MoM

Light rare earths: According to SMM data, the average price of praseodymium-neodymium oxide on May 31 was 369,000 yuan/mt, compared to 403,500 yuan/mt on April 30, with an average price drop of 34,500 yuan/mt in May, a monthly decline of 8.55%. Entering June, as of June 7, praseodymium-neodymium oxide prices fluctuated, with the average price on June 7 at 364,000 yuan/mt.

Praseodymium-neodymium oxide output: In May 2024, domestic output of praseodymium-neodymium oxide was 6,625 mt, down 1.3% MoM. The main decrease was in Jiangxi. According to an SMM survey, some separation enterprises in Jiangxi halted production in May due to environmental protection issues. Some industry insiders revealed that production is expected to return to normal in July, with praseodymium-neodymium oxide output in Jiangxi decreasing by 7% MoM, while output in other regions remained flat compared to April.

Dysprosium oxide prices fell 5.15% in May, and domestic output decreased by 0.8% MoM

Heavy rare earths: According to SMM data, the average price of dysprosium oxide on May 31 was 1,935 yuan/kg, compared to 2,040 yuan/kg on April 30, with an average price drop of 105 yuan/kg in May, a monthly decline of 5.15%. Entering June, dysprosium oxide prices fell slightly, with the average price as of June 7 at 1,890 yuan/kg.

Dysprosium oxide output: In May 2024, domestic output of dysprosium oxide was 215.5 mt, down 0.8% MoM, with the main decrease in Jiangxi.

Terbium oxide prices fell 9.67% in May, and domestic output remained flat MoM

Heavy rare earths: According to SMM data, the average price of terbium oxide on May 31 was 5,980 yuan/kg, compared to 6,620 yuan/kg on April 30, with an average price drop of 640 yuan/kg in May, a monthly decline of 9.67%. Entering June, terbium oxide prices showed a weak trend, with the average price as of June 7 at 5,725 yuan/kg.

Terbium oxide output: Domestic output of terbium oxide was 40.8 mt, flat on a MoM basis.

Outlook: Intense negotiations between upstream and downstream, attention to changes following the Myanmar rare earth mine accident

Supply: According to an SMM survey, praseodymium-neodymium oxide prices and output both fell in May. SMM predicts that in the upcoming off-season for NdFeB, praseodymium-neodymium oxide output will continue to shrink in June. According to a report by Financial Associated Press on June 5, a landslide occurred at a rare earth mining site in Banwa, Kachin State, Myanmar, on June 4, causing multiple people to go missing, and rescue work is currently underway. Continuous heavy rainfall has been occurring in the Kachin State area. According to SMM's current understanding, this incident has not yet affected China's imports of rare earths from Myanmar. SMM will monitor the subsequent developments of the incident.

Demand: The operating rates of magnetic material plants in May fell MoM compared to April. Due to the upcoming off-season for NdFeB, most industry insiders have weak confidence in future demand. Magnetic material companies are mostly bargaining down prices, and trades were muted.

In summary, with the expectation of a slight reduction in oxide supply in May and June, upstream enterprises refrained from cutting offers to maintain profits. Meanwhile, downstream demand is weak, and with the off-season approaching, downstream companies are reluctant to accept high prices and are seeking low-price sources. This will make future negotiations between upstream and downstream very intense. It is recommended to pay attention to changes in rare earth imports and exports, especially from Myanmar, as well as the situation of large-scale purchases and long-term orders in June.