China’s Dy, Tb rise on high bids, possible stockpiling

A rise in bid prices from major rare earth firms and expectations of a national stockpiling drive have pushed up China’s dysprosium and terbium prices, despite limited spot demand from the magnet sector, according to market participants.

The range for 99.5pc dysprosium oxide rose to 1,850-1,870 yuan/kg ($260-262/kg) ex-works today, up from Yn1,780-1,800/kg ex-works on 15 May and from Yn1,760-1,780/kg ex-works on 14 May. Prices for 99.99pc terbium oxide moved up to Yn4,000-4,040/kg ex-works today from Yn3,850-3,890/kg ex-works on 14 May.

The rises were attributed to higher purchase prices from major rare earth firms amid expectations of a national stockpiling drive in the near term.

Bids from major rare earth companies for 99.5pc dysprosium oxide rose to Yn1,850/kg today, up from Yn1,780/kg on 15 May, while their tender prices for 99.99pc terbium oxide were higher by 3pc from 15 May at Yn4,020/kg today.

Suppliers withheld material from spot sales in anticipation of even higher prices this week amid tight spot availability and rising bid prices. A possible national stockpiling drive and output restarts at overseas plants have also shored up market confidence.

Spot demand from magnet manufacturing plants remained limited because of lower exports of high-end magnets, amid the escalating Covid-19 situation outside of China and a fall in domestic purchases. Consumers opted to watch the market for further developments.

Metal processing plants have cut their output by at least 30pc this month because of higher oxide costs and lower magnet purchases, leading to a slowdown in spot demand for dysprosium and terbium oxides. Market participants expect lower consumer purchases to prevent prices from rising much in the near term, unless major rare earth firms raise their bids or the Chinese government launches national stockpiling purchases for rare earths.

China’s state reserve bureau has not launched any national stockpile for rare earths since the first half of 2017.

Market participants anticipate expectations of national stockpiling purchases and a possible increase in demand from the downstream new energy vehicle (NEV), wind power and inverter air-conditioner sectors to further boost dysprosium and terbium prices in the near term.

China’s NEV production and sales increased in April from a month earlier, as the Covid-19 outbreak eased in China and the government took measures to boost sales.

China produced 80,000 NEVs in April, up by 60pc from March but down by 22.1pc from a year earlier. And sales reached 72,000 units last month, up by 35.8pc from March but down by 26.5pc from a year earlier, according to data from China’s automotive manufacturers association.

China announced in April that it will extend government subsidies on NEVs for two years to the end of 2022 and exempt the purchase tax on NEVs for next year and 2022.

The wind power sector remains the main driver of neodymium-iron-boron (NdFeB) demand. A few market participants expect a recovery in the wind power sector during the second quarter to add 5,200t of domestic NdFeB consumption this year.

Argus estimates that demand for NdFeB from the inverter air-conditioner sector will surpass 7,000t this year, despite China’s January-April air-conditioner output falling by 24.8pc from a year earlier to 55.81mn units amid the coronavirus outbreak, according to data from the national bureau of statistics.