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China rare earths prices see post-New Year rises as high as 22%

(ATF) Prices in China’s rare earth permanent magnets sector soared 6.63% over six consecutive days – with the largest single increase as high as 22%.

Zinc industry share prices also surged with China Baoan, Minmetals Rare Earth, Rare Earth North, Jiangxi Copper Industry, Chapter Tungsten and Huahong Technology hitting their daily increase limits, according to mining120.com

Related stocks have also risen simultaneously, with Shenghe Resources, Northern Rare Earths, Southern Rare Earths and other firms benefitting.

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Last week, the Ministry of Industry and Information Technology and the Ministry of Natural Resources issued this year’s first batch of total control targets for separation of rare earth mining and smelting. The caps will be 84,000 tons and 81,000 tons respectively. This year’s separation indicators account for 60% of 2020’s. 

The Shanghai Metals Market (SMM) believes that the index of mining and smelting separation has been increased to satisfy growing demand from manufacturers, such as new energy vehicle (NEV) and wind turbine makers, and to avert a recurring price bubble. 

China is using its strength in rare earths to help its trade power brokerage with other countries, especially the US. Though promising less than last year, the output targets could have been much lower, and this has been seen as a nod to bettering relations with the Biden administration.

MATURING INDUSTRY

Chinese officials say the earlier announcement of the indicators reflects how its rare earth industry is maturing and stabilising.

On top of this, 2021 coincides with the beginning of the 14th five-year economic plan and the rare earth market may have to adapt to different market conditions as China ramps up its new era of tech-led industrial growth.

The increase in quotas for domestic mines is in line with market expectations. The new supply shifts from overseas mines to domestic mines, which will help upstream companies increase market share – and reduce costs and performance flexibility – is expected to increase.

On February 20, the State Council issued a directive promoting the construction of big data centres in the rare earth industry and encouraging internet companies to develop operations centres, call centres and other services.

BLACK TUNGSTEN

China says its rare earth reserves are the largest in the world. Ganzhou and Jiangxi provinces can contribute 70% of the world’s medium and heavy rare earths and 60% of black tungsten every year.

Suzhou Securities analysts said demand for rare earth permanent magnet materials, mainly neodymium iron boron, is needed downstream for automobiles (50%), wind power (10%) and inverter air conditioners (8.4%). These three sectors have benefited from policy stimulus, the analysts said. It is predicted that by 2025, demand for praseodymium and neodymium oxide in China will reach 43,000 tons and grow 14.5% in the five years to 2025.

Suzhou Securities also believes that demand for high-performance NdFeB is still the main driving force for the price increases of rare earth products. Each NEV consumes about 3kg of NdFeB. 

HOLIDAY ORDERS

Research of the spot market revealed there was generally no reduction or suspension of production during the Spring Festival, and some large magnetic material companies reported that orders were strong during the holiday period. 

On the second day after the holiday, although companies have resumed work and the market is bullish, the rare earth spot market prices are still low and transactions very scarce. 

In terms of light rare earths, the supply of lanthanum and cerium exceeds demand and is still hovering at a low level. Many separation plants are actively seeking buyers to reduce their inventory accumulated at this early stage after the holiday. 

The main application areas of lanthanum-cerium products are polishing powder and metallurgy industries. The quotation of neodymium praseodymium products is still going up. 

TERBIUM CONSOLIDATING

The mainstream quotation for neodymium praseodymium oxide is 480,000 yuan/ton, and the actual transaction price has been as high as 475,000 yuan/ton. The mainstream quotation of neodymium praseodymium metal is around 590,000/ton. The quoted price is 600,000 yuan/ton. 

In terms of medium and heavy rare earths, terbium and holmium products are still consolidating at a high level, and the quotations are slightly increased from before the holiday. 

Holmium oxide inquiries are more active and spot purchases are hard to find. As the magnetic materials factories resume production, it is expected that the medium and heavy rare earths will still price increases.

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