Rare earth industry excess demand for excess capacity shrinks

On April 3, Xiamen Tungsten Industry issued its 2012 annual report, which pointed out that the rare earth industry had been leaked after the frenzy of 2010-2011, which severely weighed on the overall efficiency of the company. Coincidentally, Baotou Iron and Steel Rare Earth, Taiyuan Corundum, China National Color Co., Ltd., and many other rare earth concept listed companies are all published in the first quarter of this year, the annual report or announcement that the impact of the rare earth market downside, the company's profits have declined in varying degrees.

Xiamen Tungsten Industry Co., Ltd. stated in its annual report that the external economic environment is not good. The prices of rare earths have been declining for the whole year last year. Some raw materials have been over-reserved at high prices, but the downstream industry's demand has been insufficient, resulting in the company’s income from rare earth products. The price dropped. Among them, the average price of antimony oxide was 383,000 yuan/ton last year, a year-on-year drop of 45%.

Baotou Iron and Steel Rare Earth also announced its annual report at the end of March, saying that due to weak economic recovery in Europe and the United States last year, there was a resonance in China's economic growth slowdown, coupled with rising prices of raw materials, increased environmental protection, and many other reasons for reducing profits. The degree of prosperity of the company has dropped significantly. The company achieved operating revenue of RMB 9.242 billion, down 19.83% year-on-year. Among them, rare earth metal products were affected by the lack of orders for downstream magnetic materials, and the sales volume was particularly significant. The operating revenue of this product fell by 47.18%.

It is reported that Baotou Steel Rare Earth is a leading enterprise in China's rare earth industry, and it is one of the largest scarce resource monopoly enterprises in China, with annual output of rare earth accounting for more than 60% of the world's total.

The same situation also occurred in the large-scale rare earth-related enterprises such as Guangzhe Nonferrous Metals, Zhongcai Co., Ltd. and Taiyuan Gangyu.

Guanghan Nonferrous Metals previously released its 2012 annual earnings reduction forecast announcement, saying that due to the downtrend of rare earth and tungsten markets, the company's main product prices continued to drop, and its gross profit margin declined. It is expected that the net profit attributable to shareholders of listed companies in 2012 will be reduced by 60 compared to the same period of last year. % to 80%.

In its annual performance report, China National Shares said that the decline in the prices of non-ferrous metals and rare earths has affected the company's main business gross margin, and its net profit has dropped by 49.52%.

Taiyuan Gangyu announced its annual report last year on March 30. It also stated that the company’s net profit decreased by a year-on-year, a drop of 87.43%. The main products, such as NdFeB and diamond products, were plagued by market downturns.

In 2012, the performance of rare earth companies can be described as an overall decline, and the decline is fierce. Industry insiders bluntly said that “many rare earth companies have no plan or over-planned production in the 2010 surge of profits, which eventually led to oversupply in the market, and the price system collapsed, causing a sharp drop in prices.”

At the third session of the Third Council of the China Nonferrous Metals Industry Association held recently, President Chen Quanxun bluntly stated that "Rare earth production capacity has become more serious and the capacity utilization rate is less than 40%."

On August 6, 2012, the Ministry of Industry and Information Technology of the People's Republic of China issued the "Environmental Access Conditions for the Rare Earth Industry," which calls for the adjustment and upgrading of the structure of the rare earth industry to promote the sustained and healthy development of the industry. In an interview with the media, Jia Yinsong, director of the rare earth office of the Ministry of Industry and Information Technology, said that the introduction of this regulation was aimed at improving the quality of production and operation of rare earth industries in China.

“In 2012, the rare earth industry was generally frustrated. The government has realized its seriousness and has issued corresponding policies to support the structural adjustment and development of the industry. The enterprises themselves have also 'brought' to slow down the production rate and to destocking. However, whether the rare earth industry can stand up this year still needs time to test.