Rare denounced conceal serious overcapacity

"Rare earth industry, the whole industry chain are decadent unbearable this year is to the freezing point, in June sales to its lowest in two years, the order is very small, with an estimated 7-8 months would be even worse." By the end of June, the domestic rare earth minerals agency Manufacturers Qiu Zhicheng, on the "new industries" Reporters large inverted grievances.

Qiu Zhicheng of our products manufacturers, rich in rare earth mineral resources Ganzhou, Jiangxi. Just before the June 18, Ganzhou Authority organized mine safety inspections, relevant departments are private mining of rare earth crackdown launched a full-scale, the majority of private mining stocks were seized.

Despite the positive impact against private mining, rare earth quotations began to rise, but the downstream market demand does not pick up, the oversupply of criticism still can not be effectively mitigated. Baotou Steel Rare Earth, represented by rare earth traders, had reluctantly chose discontinued insured. Qiu Zhicheng overseas customers or reject replenishment transactions scarce, investors can hardly optimistic.

Prices rebounded briefly

Recent Ganzhou action against illegal exploitation of rare earth bear fruit, rare earth prices began to rise.

Wikipedia information rare earth industry, senior analyst Du Shuai soldiers to reporters, for example, since June this year, the severity of the rare earth oxide prices have increased, including praseodymium oxide from 1.1 million yuan per ton rose to 1.6 million yuan per ton, terbium oxide from 2.2 million yuan per ton rose to 3.1 million yuan per ton. Within a month, the two products rose by as much as 40% -50%. But the prices are still lower than last year's lowest price.

"Our concern is that rare earth-related product prices, but because of Ganzhou combat exploitation of private mine this gimmick caused transient recovery." Du Shuai soldiers bluntly, the government's remediation efforts is still not big enough, the effectiveness is limited, all prices could No steady also only play a question mark. Downstream processors and traders are on the sidelines.

The downstream end of the current capacity utilization rate of NdFeB products into seven or eight, but not low-end products to three percent, in fact, the low-end products accounted for 80% of total NdFeB market.

Data shows that in 2011 foreign customs import statistics than the rare earth export statistics of China Customs number higher than 1.2 times the normal amount of smuggling that 120% of exports.

For the rare earth industry longstanding private mining excessive digging and smuggling in recent years, relevant departments of the action never stops in order to protect rare earth market order, especially in 2012.

April 2012, China Rare Earth Industry Association to set up; June, formally introduced Rare invoices; August, rare earth trading platform was set up; September, the state of rare earth resources in the implementation of strategic purchasing and storage. In addition, the government also increased the rare earth industry, environmental barriers to entry. October, the National Office of the Ministry of Industry and Information also carried out illegal acts on the verification of the consolidation of rare earth action.

Although the government campaign frequently, but still can not stop the private mining and smuggling, and these illegal acts have intensified the trend.

"Adequate supply of high profits and a lot of people take the risk. Rare earth materials manufacturers in order to make the difference and avoid state taxes, preferring to risk the purchase of raw ore from private mines, which has become the unspoken rules of the market." An unnamed country Rare earth traders told reporters, many local governments forced performance requirements, collusion with the private mining boss, or eye, close one eye.

As a result, they pulled down the prices of rare earth products, forming a vicious competition in the market environment.

For similar Ganzhou government seizure of private mining act, indeed, to some extent, ease the contradiction between supply and demand of rare earths, however, to really promote the earth tends to balance supply and demand, alone against private mining can not be done.

Severe overcapacity

Rare earth industry has been in oversupply, production than sales momentum, once the demand is slightly sluggish, industry-wide weakness quickly.

Of rare earth resources in the country, accounting for 23 percent of the world total, but it took more than 90% of the world market supply. The current global production capacity of rare earth minerals, including private, including about 20-30 million tons, while the global demand for rare earths is more than ten million tons, far higher than the supply demand.

Ministry of Commerce on July 1 announced 2013 second batch of rare earth export quotas show LREE, heavy rare earth quotas of 13,821 tons and 1,679 tons. Plus released the first batch of 15,501 吨 quota of rare earth export quotas for the year 31,001 tons, compared with last year's 30,996 ton for flat. However, according to Chinese customs statistics Information Center recently released data, in 2012 China's rare earth minerals, metals and rare earth mixture exports totaled 16,265 tons, down 3.5 percent, accounting for only 53% of annual export quotas.

Insiders predicted by the global economic slowdown and rare earth prices rise and other factors, this year's export quotas may still be used up, a state of excess.

Investment Advisor in the metallurgical industry researcher Yuan Zhibin accept the "new industries" interview analysis, rare earth supply and demand imbalance for two main reasons: First, the lack of domestic rare earth applications, expressed in absolute amounts were smaller and the core technology behind, while the state has I hope to guide the rapid development of the field of application of rare earth; Second, increased supply of rare earth abroad, the domestic price of rare earth smuggling resulting in the low, thereby strengthening the company's sales of domestic rare earth export quotas led to the wishes of low usage.

"Foreign companies generally have a certain amount of rare earth reserves, they can first inventory, and then wait for the price changes, which is a strategy of foreign capital." China Rare Earth Industry Association Deputy Secretary-General Chen Zhanheng believe that some countries are trying to use inventory by temporarily reduce procurement strategy to drive down China rare earth prices.

Weak downstream demand

Nearly a year ago, due to the international economy has not yet out of the woods, the domestic slowdown in GDP growth and other factors, the rare earth industry has entered a period of weak demand in the doldrums. Smelting enterprises have ceased or reduced separation of rare earth materials production plant underemployment, rare earth minerals and rare earth raw material prices remained low and factories operating difficulties, have already become the norm.

July 2, performance and stock price decline of Baotou Steel Rare Earth Sarkozy announced that the company's processing plant will be discontinued dilute half. In dilute dressing plant was halted, the company smelting separation and downstream industries such as functional materials in recent years, the company can use the reserves of rare earth concentrates normal production.

This is a dilute Baotou Steel Rare Earth processing plant shut down for the first time this year, but in the situation from last year, as the industry downturn, Baotou Steel Rare Earth released on three occasions discontinued insured announcement. Other leading companies within the industry Minmetals Rare Earth, aluminum and Xiamenwuye also followed discontinued. Discontinued insured in the whole industry a month later, although some rare spot market appears broad, but after a brief rise, prices will fall. Ultimately, the 2012 annual average price of rare earth fell by about 40%.

Aforementioned rare earth traders said that since the second quarter, most of the small and medium rare earth enterprises began to stop production or semi-production, mainly due to a continuous decline in the market price of rare earth, rare earth enterprises large losses.

April 19, Baotou Steel Rare Earth released a quarterly report, the reporting period the company achieved operating income of 2.296 billion yuan, down 35.39%; net profit of 2.45 billion yuan, down 79.67%. Rising nonferrous metals, rare earth and other rare earth giant Minmetals has disclosed for the first quarter earnings report also far from ideal.

July 11, Xiamenwuye first-half earnings announcement, the company reported a net profit of 71.1757 million yuan during the period, down 77.69%. Among them, rare earth products continues to slump during the first half of this year, sales prices and sales volume fell sharply, leading to affiliated companies Changting Jinlong Rare Earth Co., Ltd. due to operating losses and provision for inventory losses of 109 million yuan to prepare.

The color of shares expected first half net profit of 13.9136 million yuan in -3478.39 million, more than the same period last year decreased by 50% -80%. Positive sea Magnets are also expected from January to June net profit of 18.84 million yuan -3769 yuan, representing a decrease of 60% -80%.

Strengthening the promotion and application of rare earth, the maximum expansion of application of rare earth market, is the survival and development of rare earth industry, the driving force and the fundamental way out.

Involving separation of rare earth materials business Hengdian East magnetic back in the second half of last year, has been discontinued. Last year, rare earth materials business to achieve revenue 31,286,000 yuan, down 68.9 percent. "Rare Earth Materials business accounted for so little impact on the company's entire performance is also very small."

Hengdian East magnetic Deputy General Manager Wu Xueping told reporters, in addition to rare earth materials, the company's main business of permanent magnet materials sales from last until the first half of this year, has a very good performance.

"The application of rare earth materials in the market belongs to MSG level requirements, the absolute demand for small and application market is also not completely open." Said Qiu Zhicheng serious, it is imperative to strengthen the promotion and application of rare earth, the maximum expansion of application of rare earth market expand the application volume, this is the survival and development of rare earth industry, the driving force and the fundamental way out.

How to expand the demand for rare earths, Yuan Zhibin suggestions: First, actively introduce rare earth application technology; Second is to strengthen businesses and Research Institute, co-operation between schools, strengthen the enterprise's own R & D strength, the government may wish to give some tax concessions, but also actively encouraging upstream vertical integration of rare earth enterprises.

From the supply side, not only to combat poaching and smuggling of rare earth private dug, but also to promote the integration of rare earth big for the subsequent liberalization of export restrictions to prepare. Only a combination of demand-side and supply-side two aspects to digest the rare earth mine production capacity excess criticism.


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