Recently, the rare earth office of the Ministry of Industry and Information Technology interviewed key enterprises in the industry and put forward specific requirements for the problem of high attention caused by the rapid rise in the price of rare earth products. China Nonferrous Metals Industry Association called on the whole 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 application. We should strengthen industry self-discipline, jointly maintain the order of the rare earth market, strive to maintain supply and price stability, and contribute to the steady growth of the industrial economy.
According to the analysis of relevant people from China Nonferrous Metals Industry Association, the sharp rise in rare earth prices this round is the result of the joint action of many factors.
First, the uncertainty of the international political and economic situation has increased. Commodity market risk spillover increased imported inflation pressure, superimposed epidemic impact, increased investment in environmental protection, rigid rise in production costs, etc., resulting in the overall high price of large raw materials, including rare earths.
Second, the downstream consumption of rare earth continues to grow rapidly, and the market supply and demand is in a tight balance as a whole. According to the data on the website of the Ministry of Industry and Information Technology, in 2021, the output of sintered NdFeB magnet, bonded NdFeB magnet, samarium cobalt magnets, rare earth led phosphors, rare earth hydrogen storage materials and rare earth polishing materials increased by 16%, 27%, 31%, 59%, 17% and 30% respectively year-on-year. The demand for rare earth raw materials increased significantly, and the phased tight balance between supply and demand was more prominent.
Third, the strong resilience of China's economy and the constraints of the "double carbon" goal make the strategic attribute of rare earth more prominent. It is more sensitive and more concerned about it. In addition, the scale of rare earth market is small, and the product price discovery mechanism is not perfect. The tight balance between supply and demand of rare earth is more likely to trigger complex psychological expectations in the market, and it is more likely to be coerced and hyped by speculative funds.
The rapid rise of rare earth prices not only makes it difficult and harmful for rare earth enterprises to control the pace of production and operation and maintain stable operation, but also brings great pressure on cost digestion in the downstream application field of rare earth. It mainly affects the expansion of rare earth application, 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 China's rare earth resource advantages to industrial and economic advantages, and is not conducive to promoting the steady growth of China's industrial economy.