ferrite magnets
The latest market situation of rare earth
May 5,2022.

Recently, rare earth prices have gradually fallen, falling more than 20% from the peak in February, but they are still higher than the same period last year. NdFeB enterprises are differentiated by the sharp fluctuations in rare earth prices - large NdFeB enterprises have limited influence, but small and medium-sized NdFeB manufacturers are plagued by rising raw material prices.

As of April 25, the rare earth price index has fallen to 338.9, a 22% drop from the recent peak; but it is still nearly 40% higher than the same period last year. As far as specific products are concerned, on April 24, the price of praseodymium and neodymium oxide was 840,000-860,000 yuan / ton, down about 23% from the highest point in February. In addition, the price of neodymium oxide is 873-893 thousand yuan / ton, and the price of praseodymium oxide is 860-880 thousand yuan / ton, all of which have dropped to varying degrees.

Rare Earth Price Index Chart

In the short term, rare earth price fluctuations are mainly affected by supply and demand and market sentiment. The reason for the change in the supply and demand relationship of rare earth prices this time is mainly because of the mood and confidence of merchants. Once the epidemic is lifted, consumption will return, and production will be normal, the backlog of orders will lead to a concentration of purchases, which will cause the price of praseodymium and neodymium to rise rapidly. In the long run, there is limited room for rare earth prices to fall. With the gradual improvement of the domestic epidemic situation and the gradual recovery of terminal demand, the price of rare earths will remain at a high level under the pattern of tight supply of raw material oxides and stable supply and stable prices of the country.

Rare earth prices have risen, and the cost pressure of small and medium-sized NdFeB producers has doubled. Many small and medium-sized enterprises cannot get the goods due to insufficient funds. Even if they have orders, they cannot produce normally. At the same time, downstream customers cannot accept the high cost price. These small and medium-sized enterprises have become 'intermediate sandwiches' under the pressure of upstream and downstream, and they are under great pressure to survive. 

Unlike small and medium-sized enterprises that are troubled by the cost of rare earths, large-scale permanent magnet material companies generally have established strategic cooperation with upstream companies and can obtain raw materials at a cost lower than the market price. In addition, large enterprises can also transfer the price increase of rare earths downstream. However, on the other hand, large-scale permanent magnet material companies are also facing the problem of price lock; and the result of downstream price lock is that manufacturers cannot transfer costs through price increases, and must absorb the pressure of cost increases by themselves.

NdFeB is mostly used in new energy vehicles, inverter air conditioners, wind power generation, industrial automation, smart consumer electronics and other fields. In the face of soaring rare earth prices, some motor manufacturers are currently modifying product designs to reduce the amount of NdFeB magnets used in motors, and choose low-cost ferrite and samarium cobalt permanent magnets to replace NdFeB. end field. However, some NdFeB brands can be replaced according to different performances, and some terminal industries have strict performance requirements and cannot be replaced, such as rare earth permanent magnet motors for new energy vehicles.

In addition, some wind power companies have turned to semi-direct drive or double-fed wind turbines. Goldwind disclosed in its 2021 annual report that the company's units use direct-drive permanent magnet and medium-speed permanent magnet "two-wheel drive" technology, while Goldwind previously used direct-drive permanent magnet technology, which means Goldwind The return to semi-direct drive technology. Enterprises such as Harbin Electric Wind Energy and Shandong CRRC have also begun to test the semi-direct drive route.

For leading companies, the most feared thing is the systemic risk, that is, technology substitution. The weakness of large enterprises is that the ship is difficult to turn around. After investing hundreds of millions of equipment and technologies into a product, once downstream customers change the design and no longer use the product, it will cause a huge blow to them. It is expected that customers of large companies will not feel the rise in costs until the second and third quarters of this year. Once they are felt, they may study and take alternative measures.

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