Financial Services Association, January 30 (Reporter Wang Bin) Affected by the overall slump in the rare earth market in 2023, Shenghe Resources (600392.SH)'s performance dropped by more than 70% last year. This evening, Shenghe Resources announced that net profit due to mother is expected to be about 300 million yuan to 390 million yuan in 2023, a year-on-year decrease of 75.53% to 81.17%.

Based on this calculation, in the fourth quarter of 2023, Shenghe Resources achieved net profit of about 142 million yuan to 232 million yuan. The net profit for a single quarter was close to the sum of net profit for the first three quarters of last year. According to financial reports, the company's net profit for the first three quarters of 2023 was 158 million yuan. Industry analysts believe that the reason for this situation may be that the net profit for the same period was relatively low due to excessive raw material prices in the first three quarters of last year, and the subsequent rise in rare earth prices during the “Gold Nine Silver Ten” period, which increased profits in the fourth quarter.

In response to the reason for the decline in performance for the full year of last year, Shenghe Resources explained that sales of the company's main products increased in 2023, but due to factors such as fluctuating and declining market prices for major rare earth products, relatively weak market prices for zirconium and titanium products, and lagging changes in raw material costs such as imported rare earth concentrates and seaside sand, the average sales price and gross margin of the company's main products fell sharply compared to the same period last year, causing the company's profit during the reporting period to decline compared to the same period last year.

Among the rare earth companies listed on A-shares, Shenghe Resources is a relatively special entity. It mainly does light rare earth import mining business. A Financial Services Association reporter noticed that in terms of the results for the first three quarters of 2023, Shenghe Resources' net profit fell by about 90% year on year, far exceeding that of Northern Rare Earth (600111.SH), the leading light rare earths during the same period. According to financial reports, the net profit of rare earths in the north fell by about 70% year-on-year in the first three quarters of last year.

Yang Jiawen, a rare earth analyst at Shanghai Nonferrous Metals Network, told the Finance Association reporter that Northern Rare Earths has an exclusive supply of rare earth concentrates and has an advantage in terms of raw materials; in addition, electricity prices in Inner Mongolia are more convenient than in the South, so processing costs for rare earths in the north are also lower than those of their peers.

A Financial Services Association reporter noticed that according to the January 29 performance forecast for Northern Rare Earths, a leader in the light rare earth industry, the company's performance is expected to drop by more than 60% in 2023.

As for the reason for the decline in performance, Northern Rare Earth explained in detail in the announcement: “In 2023, due to the market supply and demand relationship in the rare earth industry, the prices of major rare earth products represented by praseodymium products have continued to fluctuate and decline since the beginning of the year, and the average price for the whole year decreased year-on-year. From the supply side, the country's total rare earth control index increased year-on-year, production capacity for recycling and reuse of rare earth resources in the market was steadily being released, the increase in imported mining increased its impact on market supply and demand, and the rare earth product market supply was steadily increasing; from the demand side, downstream demand growth in the industry fell short of expectations, and the demand driving effect was insufficient, and the overall rare earth market showed a weak trend.”

In 2023, the overall domestic rare earth market declined. According to data from the China Rare Earth Industry Association, the rare earth price index at the beginning of last year was 297, and the rare earth price index at the end of the year was 198. The decline was about 33.33%, and the price index fell to 187.42 at its lowest point during the year.

Among them, the domestic light rare earth market price trend declined sharply last year. Looking at major rare earth products, according to data from the China Rare Earth Industry Association, the average price of praseodymium oxide products was about 712,000 yuan/ton in early 2023, and dropped to 443,000 yuan/ton at the end of the year, a decrease of 37.78% for the whole year.

Also, according to data released by the China Minmetals Chemical Import and Export Chamber of Commerce, exports of rare earth products showed an overall trend of “volume parity reduction” last year. Specifically, in 2023, China's rare earth exports were 114,300 tons, up 1.4% year on year; rare earth exports were 4.396 billion US dollars, down 23% year on year; average export price was 38,500 US dollars/ton, down 24% year on year.