Finance Association, April 9 (Reporter Wang Bin) This evening, Baogang Co., Ltd. (600010.SH) announced that the company plans to adjust the rare earth concentrate related transaction price between the second quarter and northern rare earths to 16,792 yuan/ton excluding tax, down 19% from the first quarter, drawing market attention.

This is also the first time since this year that North Rare Earth and Baogang Co., Ltd. have lowered the transaction price of rare earth concentrates. In the first year of this year, the trading price of rare earth concentrate between the two sides was 20,737 yuan/ton. Based on this calculation, the trading price of rare earth concentrates between the two sides in the second quarter decreased by 3,945 yuan/ton compared to the first quarter, or 19.02% month-on-month.

Regarding the reason for the price adjustment, Baogang Co., Ltd. and Northern Rare Earth only briefly stated that the price was determined according to the rare earth concentrate daily transaction pricing method adopted by the company's shareholders' meeting in 2022 and the rare earth oxide market price calculation for the first quarter of 2024.

According to Yang Jiawen, a rare earth analyst at Shanghai Nonferrous Metals Network, the decline in Q2 rare earth concentrate trading prices between the two sides exceeded expectations; as an industry trend vane, the sharp reduction in the rare earth concentrate trading price of Baogang Co., Ltd. will enhance bearish sentiment in the market.

Yang Jiawen told the Financial Federation reporter that the two sides lowered rare earth concentrate trading prices in the second quarter mainly because of the sharp drop in rare earth prices since this year. “In the first quarter of this year, the rare earth concentrate trading prices of North China and Baogang Co., Ltd. increased slightly month-on-month. The reduction in rare earth concentrate trading prices in the second quarter is conducive to reducing the cost of rare earth raw materials in the north, but it is likely to affect the industry's expectations for rare earth prices in the future.”

As downstream demand fell short of expectations, the overall domestic rare earth market showed a downward trend in prices in the first quarter of this year. The rare earth price index trend chart provided by the China Rare Earth Industry Association shows that as of March 31, the price index was reported at 155.8 points, compared to 198 points at the beginning of the year, down about 20%. Looking further, the prices of major products such as neodymium oxide, praseodymium oxide, and praseodymium oxide all dropped by around 20% in a single quarter.

Furthermore, the continued increase in rare earth mining indicators in the first half of the year has also affected the price trend of rare earth products to a certain extent. According to the “Notice on the 2024 First Batch of Rare Earth Mining, Smelting and Separation Total Control Indicators” issued by the Ministry of Industry and Information Technology and the Ministry of Natural Resources, the total control indicators for the first batch of rare earth mining, smelting and separation this year were 135,000 tons and 127,000 tons respectively, up 12.5% and 10.4% respectively from the same batch in 2023.

It is worth mentioning that the price of praseodymium oxide has recently risen. Shanghai Nonferrous Metals Network believes that in a situation where mine-side holders push prices and downstream magnetic materials companies have almost bottomed out their inventories, the group has driven up prices, tightened mine-side raw materials, and traders speculate and centralized procurement by downstream enterprises, leading to a significant rise in rare earth prices after the Ching Ming Festival holiday.

The rare earth spot market weekly report released by the Rare Earth Exchange on April 3 pointed out that the listing price of rare earths in the North remained flat month-on-month in April, which played a key role in the recovery of the market, but future market price trends still need to be observed.

According to the prices of major rare earth products released by the China Rare Earth Industry Association, the average price of praseodymium oxide rose to 388,000 yuan/ton on April 8, up 34,000 yuan/ton from the price of 354,000 yuan/ton on March 29, an increase of 9.6% within five trading days. Due to expectations of a reduction in rare earth concentrate trading prices, the price of praseodymium oxide showed a correction on April 9. Yang Jiawen predicts that Q2 rare earth concentrate trading prices have dropped so much that rare earth prices may continue to fall in the short term.