A Brief talk on China's rare earth industry
Talk about China's rare earth Industry Why China's rare earth industry has such a big advantage?
Rare earth is a hot industry in China. When the relationship between China and the United States and other developed countries changes, rare earth will easily become the focus of public opinion at home and abroad. In fact, many other countries besides China have rare earths, but because of the high cost of mining them, most stopped mining them after China's massive exports in the last century.
The global rare earth industry chain has formed the pattern of China supplying most of the output mainly due to two factors:
1) China's production of light rare earths has a cost advantage that no company in the world can match;
2) Ion-type rare earth minerals rich in medium and heavy rare earth metals are unique resources in China, Myanmar and a few other countries.
Light rare earth: Bayan Obo rare earth mine has absolute cost advantage
Domestic light rare earth is mainly distributed in The Baiyun Obo mining area in Baotou, Inner Mongolia, with about 100 million tons of proven rare earth resources and an average REO content of 3%-5%. The rare earth ore in Bayan Obo is symbiotic with iron. The main rare earth minerals include cerium fluoride and monazite, with a ratio of 3:1, both of which have reached the rare earth recovery grade. The total reserve of rare earth is 35 million tons of REO, and the reserve of rare earth exceeds 80% in China, making it the most important production base of light rare earth in China. In addition, the tailings pond of Bayan Obo mine has a reserve of 200 million tons, including a rare earth reserve of about 12.8 million tons of REO. The light rare earth resources have absolute reserve advantage, grade advantage and cost advantage globally. Baotou Iron and Steel Co., Ltd. USES tailings to refine rare earth concentrate and sells all the rare-earth minerals to North China through related transactions. The sales price is redetermined every six months according to the actual situation. Baotou Steel Co., Ltd. and Northern Rare Earth Group Co., LTD., on the basis of comprehensive consideration of market price of rare earth carbonate, deducting manufacturing cost of rare earth carbonate and average profit of the industry, and considering processing yield and other factors, propose the price of rare earth concentrate from January to September 2017 to be RMB 9,250 / ton (excluding tax). From September 1, 2017 to the end of 2018, it is RMB 14,000 / ton (including tax, RMB 16,380 / ton); It will be adjusted to 12,600 yuan/ton (excluding tax) from January 1, 2019.
The unique resource advantage gives China absolute cost advantage in light rare earth production. The cost of baotou rare earth carbonate mixture in Inner Mongolia is stable. According to the data of Baotou Steel Co., Ltd. and Northern Rare Earth Group co., LTD., based on the price of the rare earth concentrate signed by Baotou Steel Co., Ltd. and Northern Rare Earth Group co., LTD., the total cost of the rare earth production of neodymium oxide is 220,000 yuan per ton. According to the estimation of self-mining cost in other regions, the average cost of producing praseodymium oxide from cerium fluoride ore in Sichuan in 2019 is 244,200 yuan/ton, while the average cost of producing praseodymium oxide from medium-heavy rare earth ore in China is 260,000 yuan/ton. The cost of imported mines is calculated according to the import price and the price of rare earth oxides. The production cost of praseodymium oxide is 286,700 yuan/ton in Myanmar mine and 262,200 yuan/ton in the United States mine. In a comprehensive comparison, the rare earth production of praseodymium oxide also has a very obvious cost advantage when the sales price of the rare earth concentrate is directly used to calculate the cost, which is unmatched by overseas mines.
Heavy rare earth: China has rich reserves of ionized rare earth minerals and it is easy to exploit them
Ion-type rare earth minerals are unique resources in A few countries such as China and Myanmar, with a high content of medium and heavy rare earth minerals. They are mainly distributed in seven southern provinces in China, such as Jiangxi, Fujian, Guangdong, Hunan, Guangxi, Yunnan and Zhejiang. This kind of resource deposit has shallow burial depth and is easy to be exploited. The mining process of ion-type rare earth ore is relatively simple. Only a certain concentration of ammonium sulfate solution is injected into the liquid injection hole to give sufficient chemical reaction time, and then the collected leaching solution is precipitated. Then, the rare earth elements can be exchanged and analyzed to obtain mixed rare earth oxides.
The effect of the last round of restocking on the rare earth plate
In history, there have been three rounds of official rare earth purchase and storage. The State Administration of Reserve officially started the rare earth purchase and storage in September 2012, August 2014 and March 2016 respectively. Among them, the negotiations for the last round of SRC began in April 2016, and the first round of SRC bidding was not completed until December 2016, followed by three consecutive rounds of SRC purchases in January, March and May 2017. The whole negotiation cycle is relatively long, but the continuous bidding work is very fast after the negotiations are completed.
The purchasing and storage cycle of the STATE Reserve Bureau in 2016 can be divided into four stages:
The first stage: January 2016 -- March 2016, market expectation stage;
The second stage: April 2016 -- November 2016, the implementation stage of commercial storage;
The third stage: From December 2016 to May 2017, the implementation stage of SSP;
The fourth stage: June 2017 - December 2017, the completion stage of the purchase and storage.
In terms of commodity prices, in the last round of reserve purchase, after the state decided to start the reserve purchase, the price of light and heavy rare earths rose to a small extent. Later, with the gradual advance of commercial reserve and state reserve, the price gradually increased. Among them, the price of terbium oxide rose from 2.4 million yuan/ton at the beginning of the market to the peak of 4 million yuan/ton, up 66%; The price of praseodymium oxide rose from 261,500 yuan/ton at the beginning of the market to 510,000 yuan/ton at the peak, up 95%. But with the completion of the stockpiling work, commodity prices fell rapidly.
From the company's stock price changes, the previous round, during the period of collection and storage of heavy rare earth minmetals rare earth and the light rare earth bibcock of the north's share price in market expectations and dealer store implementation of stage performance, but in the end of the store on the implementation of a wave of rapidly rising prices, but as the store is completed and shares fell again to the level of the market before starting.
On the basis of fundamental judgment, light and heavy rare earth prices are expected to diverge
The dominant rare earth species are praseodymium oxide, dysprosium oxide and terbium oxide. The prices of these three varieties represent the trend of price fluctuation of rare earth varieties. According to the statistics of Baichuan, the production of praseodymium oxide in China in 2019 was 51,200 tons, with a slight year-on-year growth. Dysprosium oxide and terbium oxide produced in 2016 and 370.5 tons respectively, both of which saw significant year-on-year declines, mainly due to the reduction of domestic supply of medium and heavy rare earth resources due to the closure of myanmar in May last year. In addition, from the balance sheet, in 2019, praseodymium oxide is still in surplus state, dysprosium oxide surplus narrowed, terbium oxide supply and demand is basically balanced.
Praseodymium oxide: current price is not high, but the spot supply is tight
Neodymium praseodymium oxide in 2019 with a wave of market, price from 250000 yuan/ton rising to 350000 yuan/ton, this is mainly because of myanmar to start in May, after start the sino-us trade friction intensified, xi also at that time go to jin li, chairman of the permanent magnet research, a series of factors on the level of national policy, degree of market awareness of the rare earth ascends, drive commodity prices higher. The price rose to 350,000 yuan and then began to fall as the market eased, dropping to 280-300,000 yuan.
Dysprosium oxide and terbium oxide: Costs are up, production is down, demand is up
The price trend of medium and heavy rare earths in 2019 is basically the same as that of light rare earths. The price of dysprosium oxide continued to rise from the lowest level of 1.2 million yuan/ton to the highest level of 2.2 million yuan/ton, and then recovered to 1.5 million yuan before continuing to rise. The price of terbium oxide continued to rise from a low of 2.8 million yuan/ton in 2019 to a peak of 4.2 million yuan/ton, before being revised back to 3.5 million yuan before continuing to rise. Dysprosium oxide price at 1.93 million yuan/ton, terbium oxide price at 4.175 million yuan/ton, the short-term rising trend is obvious.
In fact, in recent years, the production cost of medium and heavy rare earths in China has increased significantly. In the past, when Private mining was rampant in China, the production cost was relatively low. However, after the country severely cracked down on "black rare earth" mining, many enterprises shifted to explore and produce abroad, such as the ionized rare earth mine in Myanmar, which led to the cost increase. In addition, from the perspective of demand, domestic high-end NdFeb magnetic material production capacity is benefiting from the increasing demand in terminal areas such as new energy vehicles. The production capacity is still in the expansion cycle, and the scale of medium and heavy rare earth metals such as dysprosium oxide and terbium oxide consumed by these high-performance orders is also continuously increasing. To sum up, the domestic dysprosium terbium fundamentals show a development pattern of increased cost, decreased production and increased demand.
Medium and long-term price judgment: 280,000 praseodymium oxide, dysprosium oxide more than 2 million, terbium oxide more than 4.5 million
Neodymium praseodymium oxide at home and abroad, or in excess of supply and demand pattern, as overseas separation of light rare earth smelting capacity gradually put into production, domestic products need to participate in the international market competition, such as Lynas is now the main production of praseodymium neodymium cerium, lanthanum Lynas domestic praseodymium and neodymium praseodymium neodymium is competition, China is also in constant increase of light rare earth index data, the future supply of neodymium praseodymium oxide will increase, the price is likely to remain fluctuates in 280000 yuan/ton. Dysprosium, by contrast, there is a big rise in the prices of terbium space, the first is fundamental to maintain tight supply and demand pattern of heavy rare earths in the second as the exclusive supplier of varieties, and countries also have the consciousness of protecting this precious resource, so the country in heavy rare earth mining and smelting index also has not been raised, bureau when considering purchasing and other countries, will also focus on heavy rare earths in varieties.
This year as domestic outbreaks, the domestic rare earth smelting separation enterprise half shut down, causing praseodymium neodymium yield by 40-50%, and the downstream processing enterprises production was affected by 40-50%, but the downstream enterprises to return to work faster, downstream enterprises start to inventory so march praseodymium neodymium prices also rose slightly, 3-4 months neodymium praseodymium prices fluctuate on a small scale, recently a neodymium praseodymium prices are down to 250000 yuan, but less spot on the market, because half of the production is to reduce in February, combined with domestic final demand recover faster, As a result, praseodymium was basically unavailable on the spot market at the end of April. Now the price of praseodymium is also relatively low, some enterprises began to stock up, so the price of praseodymium is very strong. A Brief talk on China's rare earth industry
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