Rare Earth Industry Expected to Continue Growing In the Second Half



Rare Earth Industry Expected to Continue Growing In the Second Half

The latest monthly prosperity index of the nonferrous metal industry at ce.cn shows that in June 2017, the prosperity index of the nonferrous metal industry was 28.5, down by 1.8 from the previous month into the "cold" zone; the leading index was 87.3, down by 1.7 from the previous month; the coincident index was 80.0, down by 2.0 from the previous month. Preliminary judgment is that the industry downturn is mainly affected by factors such as investment struggles. If the investment factors were eliminated, the industry's prosperity index would steadily maintain in the "normal" zone. In the first half of 2017, China's rare earth industry as a whole operated more strongly than the monthly prosperity index of nonferrous metal industry at ce.cn, characterized by price recovery, flourishing imports and exports and industry order improvement.

The prices of main rare earth products had stabilized at a low level since late November 2016 and have begun to rise since the beginning of this year. With the in-depth implementation of the special action of eight national ministries of cracking down on illegal behavior related to rare earths, and the support of environmental protection supervision and national reserve policies, the rare earth market is expected to continue an upward trend and the prices of rare earth products quoted by the North Rare Earth Alliance and the South Rare Earth Alliance have steadily increased. On the whole, the prices of light rare earth oxide increased in the first half of this year compared with the same period last year, while the prices of medium heavy rare earth oxide sometimes increased and sometimes decreased. Among them, the prices of praseodymium neodymium oxide and metal wit wide applications, a large market share and high economic value increased the most.

In June 2017, the price of representative rare earth products - neodymium oxide, terbium oxide and dysprosium oxide was 295,000 yuan / ton, 1.186 million yuan / ton, 3.640 million yuan / ton, down by 10.8%, down 7% and up 29.1% respectively; the price of lanthanum oxide and cerium oxide increased by 16% and 31.3% respectively; the price of europium oxide was 743,000 yuan / ton, recording the highest growth of 74.9% year-on-year.

In the first 5 months of this year, the import and export volume of China's rare earth smelting and separation products was substantially increased year-on-year. Due to the special action of cracking down on illegal behavior, the supply of mineral products through non-formal channels has shrunk. As there are no smelting and separation enterprises in China that can produce rare earths on their own, imports of raw materials are needed, resulting in significant higher imports than exports of smelting and separation products. Customs statistics show that from January to May 2017, China's total imports of rare earth smelting and separation products were 9,024 tons, up by 41% year-on-year; the total exports of rare earth smelting and separation products were 22,000 tons, up by 14% year-on-year, showing a slight decrease in growth; the total exports of rare earth permanent magnet were 12,000 tons, up by 16% year-on-year. From the export structure, China's exports of rare earth smelting products are still dominated by light rear earths - lanthanum and cerium and mainly exported to Japan and the United States, etc.

On the whole, in the first 5 months of 2017, the growth in the export amount of rare earth smelting and separation products was higher than that in the export amount, reversing the condition of "price decline despite increased volume", and the export price of rare earths gradually increased.

Rare earth industry development environment analysis

1. Supply-side improvement. First, the special action of eight national ministries of cracking down on illegal behavior related to rare earths has been thoroughly implemented. Since December 2016 when the MIIT issued the Letter on Discussing and Organizing a Special Action of Cracking down on Illegal Behavior Related to Rare Earths (MIIT LYH No. 764 of 2016), a number of well-targeted, practical special actions have been carried out to tackle the problems in the rare earth industry, which has played a positive role in regulating industry order and boosting market confidence. Second, a long-term mechanism of cracking down on illegal behavior has been gradually established.

The Rare Earth Office has set up a group of experts on order rectification of rare earth industry. The group comprises technical, financial and legal experts and will provide support and assistance for order rectification of rare earth industry from aspects including production technology analysis, raw material component inspection, financial data analysis and law-based administration. Third, as the price of rare earths fell significantly early this year, some rare earth production enterprises have actively taken measures to reduce production.

2. Demand-side growth. Supply and demand are correlated. Since this year, while the supply side has tightened, the demand side has also shown positive changes, mainly reflected in the following two aspects. First, the rapid development of new energy vehicles will further unleash demand for magnetic materials, providing a new growth point for downstream consumption of rare earths. Second, downstream consumption of light rare earths is significantly better than in the past. This is mainly attributed to the demand for thinner products in the flat display field, strong demand of the environmental field and a gradual increase in downstream consumption of lanthanum and cerium.

3. Strengthened self-regulation. After the establishment of the six large groups, the "small and scattered" pattern of the rare earth industry has been changed effectively, which has provided a solid foundation for standardizing industry order and strengthening industry self-regulation. The South Rare Earth Alliance and the North Rare Earth Alliance have separately launched a quotation mechanism, which has played a positive role in guiding market expectations and further improved the environment for industrial development.

In the second half of this year, as both supply and demand sides will continue to improve, the industry order is expected to be further standardized and the market sentiments will continue to become better, the rare earth market still has room for growth.