China Northern Rare Earth net profit falls over 60% amid falling RE prices

Net profit at the Chinese rare earth producer was estimated to be in the range of 2.17 billion yuan ($303 million) to 2.33 billion yuan in 2023, a decrease of 3.65 billion to 3.81 billion yuan from 5.98 billion in 2022, according to preliminary calculations from the company’s finance department.

The company cited continual drops in rare earth prices in 2023 for the projected reduction in net profits. 

The company said that prices of major rare earth products, represented by neodymium-praseodymium products, continued to fluctuate and decline since the beginning of 2023 due to shifts in market supply and demand, with the annual average price decreasing year on year.

Rare earth in oversupply

On the supply side, China’s rare earth total production quotas increased year on year, and the market for rare earth resource from recycling and reuse capacity also steadily released. Moreover, an increase in imported rare earth ore had an impact on market supply, the company said.

China raised rare earth production quotas and increased overseas imports in 2023 which led to oversupply and put consistent pressure on the whole market.

China’s full-year rare earths mining quota now stands at 255,000 tonnes, a year-on-year increase of 21.43%, and the smelting and separation quota totals 243,850 tonnes, up by 20.72% from 2022.

China imported a total of 175,852.5 tonnes of rare earth products in 2023, up by 44.8% compared with 2022.

“Rare earth prices are lacking upward momentum because the market stuck in a state of oversupply. I don’t think market sentiment will become optimistic in the short-term,” a rare earth producer said.

Weak downstream demand

From a demand perspective, the downstream demand growth was lower than expected, and the rare earth market showed a weak trend.

“Downstream demand hasn’t picked up significantly including the major magnets sector. The weak demand also [limited upside room in] prices despite the sufficient supply,” the producer added.

In the first month of 2024, rare earth prices, including neodymium-praseodymium oxide, remained under downward pressure.

China Northern Rare Earth’s January 2024 guidance price for neodymium-praseodymium (NdPr) oxide was 453,300 yuan per tonne, down by 40,100 yuan per tonne from 493,400 yuan per tonne in December 2023.

“Falling guidance prices from Northern Rare Earth further deepened bearish market sentiment and prices have been still under pressure amid market sentiment and weak demand ahead of the coming Lunar New Year,” a trader said.

Fastmarkets’ weekly price assessment for neodymium-praseodymium oxide 99% ratio (75:25), fob China, was $56-59 per kg on January 25, down from $58-61 per kg a week earlier. The prices fell by $15 per kg from $71-74 per kg on October 19 2023 when Fastmarkets began assessing the price.

Find out more about Fastmarkets’ rare earths prices and discover further insights here.