China Northern Rare Earth (Group) High-Tech: annual average price of major rare earth products dropped, net profit in 2023 to decrease by 61%-63.67%

China Northern Rare Earth (Group) High-Tech Co. released its 2023 performance forecast on the evening of January 29: According to preliminary calculations by the company's financial department, it is expected to achieve a net profit attributable to the owners of the parent company of 2170 million yuan to 2330 million yuan in 2023. Compared with the same period last year (statutory disclosure data ), it will decrease by 3650 million yuan to 3810 million yuan, a year-on-year decrease of 61.00% to 63.67%. It is expected that the net profit attributable to the owners of the parent company after deducting non-recurring gains and losses in 2023 will be 2040 million yuan to 2200 million yuan, which will decrease by 4000 million yuan to 4160 million yuan compared with the same period last year (statutory disclosure data), down 64.50% to 67.10%. Net profit attributable to owners of the parent company in 2022: 5983.6474 million yuan; net profit attributable to owners of the parent company, excluding non-recurring gains and losses: 6202.63.25 million yuan.

In 2023, the company implemented the new development concept, adhere to high-quality development, strengthened comprehensive budget management, improved production capacity utilization, and the output of main products reached new highs. In 2023, affected by the supply and demand relationship in the rare earth industry market, the prices of major rare earth products represented by praseodymium and neodymium products continued to fluctuate downwards since the beginning of the year, and the average price for the year decreased. From the supply side, the national rare earth quotas increased year-on-year, the market's rare earth resource recycling capacity has been steadily released. The increase in imported minerals has increased the market supply of rare earth products; from the demand side, the growth of downstream demand in the industry is less than expected, and the overall rare earth market is showing a weak trend. Although the company makes overall plans and implements comprehensive policies and strives to reduce the impact of adverse factors on the company's operating performance, affected by the decline in rare earth product prices, the net profit attributable to the owners of the parent company in 2023 will have decreased.

The prices of major rare earth products, represented by praseodymium and neodymium products, have continued to fluctuate downwards since the beginning of the year, with the annual average price falling, which has also put pressure on the performance of many rare earth companies. When Xiamen Tungsten Industry mentioned its rare earth business in its 2023 performance forecast, it also stated that sales of rare earth oxides, rare earth metals and magnetic materials products have all increased. However, due to falling raw material prices and intensified market competition, product prices fell, and profits decreased.

According to the import and export, production of rare earth, the supply of rare earths grew in 2023. However, in terms of demand, the number of orders received by downstream magnetic material companies in 2023 was less than expected. Therefore, due to the overall oversupply of rare earth products in 2023, rare earth prices were in a downward trend as a whole in 2023. In 2023, the annual decline of PrNd oxide prices was 37.76%, the annual decline of dysprosium oxide was 0.2%, and the annual decline of terbium oxide was 46.95%.

According to data from the General Administration of Customs, throughout 2023, China imported a total of 175,852.5 tons of rare earth commodities, a year-on-year increase of 44.8%, and the cumulative import value reached 15.36 billion yuan, a year-on-year increase of 39.1%. In 2023, the cumulative export of rare earth commodities was 52,306.5 tons, a year-on-year increase of 7.3%, and the cumulative export volume reached 5.34 billion yuan, a year-on-year decrease of 24.5%.

For the whole year of 2023, the annual production of PrNd oxide was approximately 72,000 tons, a year-on-year increase of 1.6%.

In 2023, rare earth quotas were issued three times within one year for the first time. On December 15, the Ministry of Industry and Information Technology issued a notice that the total control quotas for the third batch of rare earth mining, smelting and separation in 2023 are 15,000 tons and 13,850 tons respectively. The total quotas for rare earth mining, smelting and separation in 2023 are 255,000 tons and 243,850 tons respectively. In 2023, despite the large import volume of rare earth minerals, the total domestic rare earth mining quotas still increased by 21.43%.

Entering 2024, after experiencing the early pre-holiday replenishment and the recovery of rare earth prices, rare earth prices have recently entered a stable stage. On January 29, the mainstream transaction price of PrNd oxide was 397,000-401,000 yuan/ton, and the average price was 399,000 yuan/ton.

As some magnetic material companies are closing for Chinese New Year holidays, market transactions were very quiet. SMM predicts that the price trend of rare earths will remain stable before the Chinese New Year.