Recently, the Rare Earth Office of the Ministry of Industry and Information Technology interviewed key enterprises in the industry and put forward specific requirements in response to the issue that the rapid rise in the price of rare earth products has caused great concern to all parties. In this regard, the reporter interviewed the relevant person in charge of the China Nonferrous Metals Industry Association. The Nonferrous Metals Association calls on the entire rare earth industry to actively implement the requirements of the competent authorities, based on the overall situation, improve the position, stabilize production, ensure supply, strengthen innovation, and expand applications; it is necessary to strengthen industry self-discipline, jointly maintain the order of the rare earth market, and strive to ensure stable supply and stable prices. Contribute to the steady growth of the industrial economy.
The relevant person in charge of the China Nonferrous Metals Industry Association said that since 2011, the relevant state departments have implemented the spirit of the document "Several Opinions of the State Council on Promoting the Sustainable and Healthy Development of the Rare Earth Industry", and successively issued and continuously improved industrial policy measures. According to market demand, increase the supply of indicators in an appropriate and orderly manner, make overall use of imported rare earth resources, and form a dynamic balance of supply and demand adaptation; introduce technological innovation and application expansion support policies to promote green and intelligent development and downstream high-end consumer applications; continue to promote corporate mergers and reorganizations, Eliminate outdated production capacity and increase industrial concentration.
Under the guidance and support of various policies and the joint efforts of the whole industry, my country's rare earth industry has actively adapted to the new changes in the domestic and foreign situation, actively adjusted the supply structure of raw materials, and generally maintained the stable operation of the rare earth raw material market and the steady development of the industry. According to the analysis of Beijing Antaike, from 2012 to 2020, the average annual compound growth rate of my country's rare earth supply is about 10.0%, which is basically in sync with the average annual compound growth rate of rare earth consumption. Under the trend of increasing supply and increasing demand, the market price of rare earth has also remained generally stable, making a positive contribution to meeting downstream consumer demand and promoting the growth of the national economy.
Since the beginning of 2021, rare earth prices have continued to rise rapidly. As of the beginning of March 2022, the prices of praseodymium neodymium oxide, terbium oxide, and dysprosium oxide reached about 1.1 million yuan/ton, 15.1 million yuan/ton, and 3.1 million yuan/ton, respectively, up about 156%, 84%, and 3.1 million yuan respectively compared with the beginning of 2021. 50%, which is close to an all-time high.
According to the analysis of relevant persons from the Nonferrous Metals Association, the sharp rise in rare earth prices this round is the result of the combined effect of many factors.
First, the uncertainty of the international political and economic situation has increased. Risk spillover from the commodity market, increased imported inflation pressure, the superimposed impact of the epidemic, increased investment in environmental protection, and rigidly rising production costs have resulted in the overall high price of bulk raw materials, including rare earth.
Second, the downstream consumption of rare earth continues to grow rapidly, and the market supply and demand are generally in a state of tight balance. According to the website of the Ministry of Industry and Information Technology, in 2021, the output of sintered NdFeB, bonded NdFeB, samarium cobalt magnets, rare earth LED phosphors, rare earth hydrogen storage materials, and rare earth polishing materials will increase by 16%, 27%, 31%, and 59% year-on-year, respectively. %, 17%, and 30%, the demand for rare earth raw materials have accelerated significantly, and the phased tight supply and demand balance is more prominent.
The third is the strong resilience of China's economy and the constraints of the "dual carbon" goal, making the strategic attributes of rare earth more and more prominent. It is more sensitive and more concerned. In addition, the rare earth market is small and the product price discovery mechanism is not perfect. The tight balance of rare earth supply and demand is more likely to trigger complex psychological expectations in the market, and it is more likely to be coerced by speculative funds for speculation.
The rapid rise in rare earth prices not only causes difficulties and harms to rare earth enterprises in controlling the pace of production and operation and maintaining stable operation but also brings great pressure on cost digestion in the downstream application fields of rare earth. It mainly affects the expansion of rare earth applications, restricts the high-quality development of the industry, stimulates market speculation, and even hinders the smooth circulation of the industrial chain and supply chain. This situation is not conducive to the transformation of my country's rare earth resource advantages to industrial advantages and economic advantages, and it is not conducive to promoting the steady growth of my country's industrial economy.
The Central Economic Work Conference held in December 2021 pointed out that my country's economic development is facing triple pressures of shrinking demand, supply shocks, and weakening expectations. The economic work in 2022 must adhere to the principle of stability and progress while maintaining stability. On February 18, 2022, 12 departments including the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the Ministry of Finance issued the "Notice on Printing and Distributing Several Policies for Promoting the Stable Growth of the Industrial Economy", requiring the supply of important raw materials and primary products to be ensured stable price. On February 25, 2022, the Ministry of Industry and Information Technology held the 2022 Raw Materials Industry Symposium, requiring to adherence to the principle of stability, seeking progress while maintaining stability, and making every effort to ensure the supply of primary products.
Therefore, the Nonferrous Metals Association calls on the rare earth industry to resolutely implement the decision-making and deployment of the Party Central Committee and the State Council, strictly implement the national macro policies, earnestly implement the work requirements of the competent authorities, and use the power of the whole industry to jointly maintain the rare earth under the current complex situation. The industrial chain and supply chain are safe and stable. The entire rare earth industry must take active actions, work together to maintain market stability, and promote the healthy development of the industry.
First, we must ensure effective supply and smooth the circulation of the industrial chain. Enterprises in the rare earth raw material industry should continue to deepen the supply-side structural reform, take the initiative to assume social responsibilities, strengthen resource guarantees, stabilize product production, increase effective supply, curb the rapid rise in market prices, and take the lead in maintaining a stable and orderly market order. Key leading enterprises should play an exemplary and leading role, take the initiative to perform long-term agreements, reduce trade links, strengthen coordination and cooperation with mid-and downstream application enterprises, and ensure the stability and smoothness of the rare earth industry chain supply chain.
Second, we must consciously accept supervision and strengthen industry self-discipline. In the face of government management departments keeping a close eye on the supply and demand and price trends of key commodity markets and maintaining a high-pressure market supervision situation, enterprises in the rare earth raw material industry must improve their political position, strengthen their awareness of the overall situation, enhance risk management and control, strengthen self-discipline behavior, and consciously accept market supervision. We must consciously resist false information, do not spread information on price increases, do not hoard, do not drive up prices, do not maliciously hype, and do not participate in speculation.
Third, we must strengthen synergy and integration, and do a good job of high-end balanced utilization. Rare earth raw material production enterprises should actively strengthen the connection with downstream application enterprises, promote the coordinated integration of upstream, midstream, and downstream industries, do a good job in information sharing and risk prediction, and jointly control a stable production and operation rhythm. It is necessary to strengthen technological collaborative innovation, jointly promote the balanced utilization of high-abundance rare earth elements, and expand high-end personalized applications. Rare earth trade and circulation enterprises must firmly grasp the purpose of serving the real economy, operate in compliance with laws and regulations, and promote the orderly operation of the rare earth market.
Fourth, we must improve the quotation mechanism and strengthen the price discovery function. Rare earth information service agencies must keep abreast of the market, adhere to an objective and fair position, accurately collect information, analyze information in-depth, and publish information prudently. The trading platform should strengthen the innovation of trading modes and mechanisms, improve the rare earth price discovery function, objectively and truly reflect the value of rare earth, and jointly promote the return of rare earth product prices to a reasonable range.
The relevant person in charge of the Nonferrous Metals Association said that the association will continue to play a good role as a bridge, cooperate with relevant state departments to strengthen market monitoring, analysis, and early warning, report key industry concerns to relevant departments in a timely manner, study and propose countermeasures, and organize upstream and downstream enterprises to strengthen industry self-discipline and exchanges. Cooperation, promote the stable operation of the rare earth market and the coordinated development of the industry and provide services to ensure the supply and price of rare earth.
