Asian Metal: Hello, Mr. Zhao. Thank you very much for granting this interview. Could you please give us some brief background on the current state of the NdFeB magnet Industry?

Zhao: The NdFeB magnet industry is oversupplied. Downstream industries are depressed. The expansion of applications to other fields is constrained by prices.

Asian Metal: Indeed. According to our statistics, China’s annual NdFeB magnet production capacity is around 180 thousand tonnes, while the demand volume is around 100 thousand tonnes. Therefore, the NdFeB magnet industry is oversupplied. Most magnet plants are running at less than 50% of capacity right now. How about your company?

Zhao: Our plant’s operating rate can reach 90% in the busy season, while we only run at around 60% operation rates in the slack season. Our operation rate ranks high among magnets plants.

Asian Metal: Absolutely, I believe 90% is a high operation rate. As far as I know there are more than 300 magnet plants in Ningbo, Zhejiang. How are their operating rates? I understand that some smaller-sized magnet plants may have closed down, is that the case? What is your opinion on this?

Zhao: The average operating rate for NdFeB magnet plants is less than 50% at present and it is true that some small plants have closed down. I think this is an inevitable result of competition. In my opinion, there are two methods of tackling oversupply. The first is to reduce output by eliminating certain plants. The second is to broaden the products’ fields of application. I think the most effective way of expanding applications is to substitute NdFeB magnets for ferrite, but we will have to reduce the production cost of NdFeB magnets in order to do this.

Asian Metal: The NdFeB magnet industry is controlled by buyers. Consumers delay making substantial purchases in order to avoid any losses caused by falling prices. The prices of rare earth raw materials, PrNd mischmetal and ferrodysprosium 80%min have all been on the decline recently. What effect will this have on the NdFeB magnet industry? Will consumers continue to reduce their purchase volumes?

Zhao: The drop in the prices of rare earth raw materials has depressed the NdFeB magnets industry and affected it in two respects. On the one hand, falling rare earth raw material prices reinforce consumers’ wait-and-see attitudes and decrease magnet orders. On the other hand, the price reductions favour lower NdFeB magnet production costs and enlarging the fields of application.

Asian Metal: As you say, the decline in rare earth raw material prices, mirroring those in the NdFeB magnet industry, appears to add insult to injury. End users refrain from making purchases in order to avoid any losses as a result of declining prices, which depresses the entire industrial chain. Both rare earth and NdFeB magnet suppliers face difficulties in reducing stocks. So what's your opinion on the PrNd mischmetal and ferrodysprosium 80%min price tendencies in Q3?

Zhao: I predict that the prices will continue to drop in Q3. Theoretically speaking, a reasonable price for PrNd mischmetal should be around RMB350,000/t. According to market rules, prices always slide below production costs in periods of decline, so it is to be expected that PrNd mischmetal prices will go down to around RMB300,000/t in Q3.

Asian Metal: Rare earth raw material prices still have room to slide, which works against the recovery of the NdFeB magnet industry. What is your your view on NdFeB magnet price tendencies in H2?

Zhao: I think NdFeB magnet prices will go down initially and then rally in H2. Prices for non-ferrous metals have already begun to show firmer tendencies, and so will rare earth prices. I believe the price trend will be a result of the combination of demand from end users and the government’s policy.

Asian Metal: It seems the NdFeB magnet industry will remain flat in the coming days. It is predicted that production capacity for NdFeB magnets will decrease to 130-150,000 per year in the coming years. What do you think about the development prospects for the NdFeB magnet industry?

Zhao: I am optimistic about developments in the NdFeB magnet industry. NdFeB magnets will have a better price/performance ratio and a substitute product has yet to be be found, even in the laboratory. Therefore, there is no reason for demand to reduce. In my opinion, the way to improve the NdFeB magnet industry and ensure it develops solidly is to provide an environment of fair competition.

Asian Metal: Thank you, Mr. Zhao, Let’s hope we see the expected recovery in the NdFeB magnet industry. Best wishes to Ichoice Magtech.