Key takeaways:

NdFeB permanent magnets are the permanent magnets with the most excellent comprehensive quality. The use of sintered NdFeB magnets can greatly reduce the amount of magnetic materials, reduce the volume and weight of the motor, greatly improve the efficiency of electrical energy-mechanical energy, and increase the energy efficiency by more than 10%-15% compared with ordinary permanent magnets. In addition to the power consumption in electricity smelting, 80%-90% of domestic electricity is consumed by motors, and the implementation of new energy efficiency standards for inverter air conditioners in 2020 will greatly accelerate the penetration of NdFeB permanent magnets in inverter air conditioners. In the future, driven by domestic carbon peak and carbon neutrality policies, energy efficiency standards will be raised in more areas, and the improvement of motor standards will become the most important part of them.

The carbon neutrality policy will promote the accelerated penetration of NdFeB permanent magnets. NdFeB permanent magnets have obvious energy-saving advantages and will promote carbon neutrality in two main aspects. On the one hand, NdFeB permanent magnet motors have high energy efficiency, and their permeability will reduce power consumption. On the other hand, NdFeB permanent magnets will help the development of new energy sources, and more than 40% of wind turbines use NdFeB permanent magnets, which will help the development of clean energy.

New energy vehicles will become the most important demand growth area for NdFeB permanent magnets. 2020 is the first year driven by the marketization of new energy vehicles, with rapid growth in production and sales in the second half of the year, with global sales of 3.24 million units and a demand for NdFeB permanent magnets of about 11,500 tons. We expect that the global sales of new energy vehicles will increase to more than 15 million units from 2021 to 2025, with a compound annual growth rate of more than 35%, and the demand for NdFeB will reach more than 56,000 tons, and the domestic demand will reach about 24,000 tons, becoming the most important consumer area of NdFeB permanent magnets.

Rare earth prices stabilized and cost pressures eased. The current round of rare earth prices have risen rapidly since May 2020 driven by demand, and have entered an accelerated rise stage from February to March 2021, and then due to the cost pressure in the downstream, on-demand procurement has reduced the purchase volume, resulting in a decline in rare earth prices, and the current national average price of neodymium metal is around 750,000 yuan/ton, a decline of more than 15%. Rare earth elements account for 60%-75% of the production cost of NdFeB permanent magnets, and the current round of rare earth price increases have led to a rise in the production cost of NdFeB permanent magnets by more than 60%, while the price of NdFeB magnets has only increased by 30%-40%. We believe that rare earth prices may stabilize. China will increase the rare earth mining quota in 2021, and the annual quota will increase by more than 25%, easing the pressure on the global rare earth supply. Keeping the price of rare earth at a reasonable level is more conducive to the common and reasonable development of the industrial chain and improving the permeability of NdFeB magnets.

NdFeB permanent magnets are facing an inflection point at the cost end. The transmission cycle from rare earth prices to the production costs of magnetic material manufacturers is 1-2 quarters, and it is expected that the first and second quarters of 2021 will become the stage with the greatest cost pressure on magnetic material manufacturers, and the cost inflection point will be ushered in in May-June, so we are optimistic about the profitability of magnetic material manufacturers rebounding in 2-3 quarters. At the same time, the share prices of rare earth magnet manufacturers have maintained a bottom shock since the second half of 2017, and we expect that as profitability recovers, the stock prices are also expected to bottom out.

Leading enterprises have accelerated their efforts to seize the high-end market. After 2019, rare earth permanent magnet manufacturers will accelerate the construction of high-end production capacity, and the direction of new production capacity products will mainly focus on high-end aspects such as new energy vehicles and consumer electronics.

We believe that this round of capacity expansion is mainly driven by the demand for high-end applications, mainly in the new energy sector, and according to our estimates, by 2025, the demand for new energy vehicle drive motors alone will increase by more than 40,000 tons/year. Represented by Jinli Permanent Magnet and Zhenghai Magnetic, both of them are actively expanding their production capacity in the direction of new energy vehicles, and it is expected that by the end of 2022, the production capacity of NdFeB blanks will reach 23,000 tons/year and 18,000 tons/year, respectively. Zhongke Sanhuan will build a 5,000 tons/year high-performance magnet production capacity at the new base in Ganzhou, Ningbo Yunsheng will increase its production capacity by 4,000 tons/year to 14,000 tons/year through internal technical transformation in 2020, and plans to build a 7,000 tons/year NdFeB blank production capacity with its own funds, mainly expanding the direction of new energy vehicles; in addition to the 1,500 tons/year production capacity of the initial issuance of shares, the construction of a 5,000 tons/year high-performance NdFeB magnet production capacity in Baotou has been started.

1. High-performance NdFeB magnets can greatly improve the efficiency of power conversion

Rare earth magnets have undergone three generations of development, and the fourth generation is currently in the research and development stage

Permanent magnet (hard magnet) refers to the material that is difficult to demagnetize after magnetization, and the main permanent magnet materials include ferrite permanent magnet materials, metal permanent magnet materials and rare earth permanent magnet materials, among which rare earth permanent magnet materials (SmCo5) were invented in the 30s of the last century and industrialized in the 60s and quickly became the most important permanent magnet materials at that time. Rare earth permanent magnet materials mainly include NdFeB permanent magnet materials (the third generation of rare earth permanent magnets), samarium cobalt permanent magnet materials (the first and second generation of rare earth permanent magnets), rare earth iron and carbon (RE-Fe-C series) and rare earth iron and nitrogen (RE-Fe-N series), at present, NdFeB permanent magnets are one of the permanent magnet materials with the largest amount, the most excellent performance and the highest cost performance, occupying most of the market space in the field of high-end magnetic materials; Samarium cobalt permanent magnets are mainly used in high-temperature working environments (250°C-350°C) due to their high cost, relatively low iron content, and are not easy to oxidize at high temperatures.

Compared with samarium cobalt rare earth permanent magnet materials, the proportion of rare earth metals in NdFeB permanent magnet materials is relatively low, with neodymium (praseodymium) elements accounting for 29%~32.5%, iron accounting for 64%~69%, and boron accounting for 1.1%~1.2%, in addition, some types of products need to be doped with heavy rare earth elements such as dysprosium and terbium, niobium, copper and other elements. The cost of samarium cobalt rare earth permanent magnets is mainly cobalt, and the second-generation rare earth permanent magnet Sm2Co17 accounts for about 50% (48%-52%), the rare earth element samarium accounts for 23%-28%, and the iron element accounts for 14%-17%.

The proportion of high-value cobalt in samarium-cobalt permanent magnets is about 1.7 times that of high-value praseodymium-neodymium in NdFeB permanent magnets, so the price of samarium-cobalt permanent magnets is higher than that of NdFeB magnets when most rare earth prices remain stable. In addition, in terms of performance, the performance of sintered NdFeB is significantly better than that of samarium cobalt permanent magnets, and is higher than that of samarium cobalt magnets in terms of remanence, coercivity and maximum magnetic energy product.

However, the Curie temperature (Tc) of NdFeB permanent magnets is relatively low, only 310-510 degrees Celsius, which is lower than the 700-800 degrees Celsius of samarium cobalt permanent magnets, so the working temperature of NdFeB is usually below 150 °C (which can meet the temperature of most downstream applications), and the samarium cobalt permanent magnets can be applied to temperatures above 250 degrees Celsius, so they are mainly used in high-temperature working environments at this stage. As the permanent magnet material with the best comprehensive performance, NdFeB permanent magnets can be divided into sintered NdFeB, bonded NdFeB and hot-pressed NdFeB according to the production process, among which sintered NdFeB permanent magnets are the most widely used and account for more than 95% of the output. The bonded NdFeB does not need to be sintered, and the subsequent machining is relatively simple, which can produce thin-walled parts, special-shaped parts and other products, which can make up for the application direction that some sintered products are difficult to meet, but the performance is weaker than that of sintered NdFeB. The hot-pressed NdFeB magnet is prepared by hot isostatic pressing and other methods to achieve the same magnetic properties as the sintered NdFeB without adding dysprosium-terbium heavy rare earth, and the compactness, corrosion resistance, orientation and magnetic properties are better;

The main indexes of NdFeB permanent magnets have a great impact on the performance of the motor

The magnetic indexes of NdFeB permanent magnets directly affect the performance of motors, and the remanence force, coercivity (intrinsic coercivity), maximum magnetic energy product and Curie temperature are the most important performance indicators of NdFeB magnets. Remanence index is the maximum magnetic flux intensity that the magnet can provide after magnetization without external magnetic field, the larger its value, the higher the magnetic density of the magnet air gap, the higher the maximum torque and the highest efficiency point; coercivity is the parameter that represents the magnet's ability to resist demagnetization, and the larger its value, the thickness of the magnet can be reduced accordingly when designing the motor, and the ability to resist overload is also stronger; the maximum magnetic energy product is the maximum magnetic energy that the magnet can provide to the outside world, and the higher its value, the less magnets are used under the same power condition.

The Curie temperature Tc is the temperature point where the magnetism disappears, which represents the temperature range in which the magnet can operate, and the temperature coefficient α the magnet represents the percentage of reversible changes in the magnet's magnetism with the change of temperature. In addition, the shape of the magnet also has a great influence on the performance of the motor, and the shape conditions such as thickness, width, chamfer and other aspects of the permanent magnet can not only affect the efficiency of the magnet, but also affect the accuracy of the mechanical installation of the magnet and the vibration situation in use, and ultimately affect the efficiency and cost of the motor. When the external magnetic circuit of the motor is fixed, the increase of the thickness of the magnet can reduce the air gap and improve the efficiency of the motor, but it will cause the motor to commutate and vibrate. If the square magnet is not chamfered, the magnetic field will change a large rate, resulting in the pulse vibration of the motor, the larger the chamfer, the smaller the pulse shock, but the chamfer will cause less magnetic flux.

High-performance NdFeB permanent magnets can improve the performance of large motors

The high-performance NdFeB permanent magnet has high magnetic performance index, high remanence and high coercivity to improve the electric energy conversion efficiency of the motor, can produce large torque at low speed, high power coefficient, and can reduce the volume of the magnet and the motor, and correspondingly reduce the volume of the equipment, which is convenient for maintenance and repair, and saves other raw materials. The high-performance NdFeB motor has a small amount of magnetic loss, resulting in high power conversion efficiency and low calorific value. The magnetic flux and high energy product of high-performance NdFeB can greatly improve the accuracy and sensitivity of motor control, and the speed regulation range can be greatly improved, reaching more than 1000:1, making the motor start more stable, more accurate control, and less loss of frequent start and speed change.

Therefore, the high-performance NdFeB magnet can greatly save energy, further reduce the energy consumption of more than 5 PCT compared with the ordinary NdFeB magnet, and the average energy-saving efficiency can reach more than 15%, and it can save 25%-30% in the application fields that require frequent start-stop and change of working speed such as inverter air conditioners and elevators.

2. Benefiting from carbon neutrality, the demand for NdFeB magnets will accelerate growth

After 2015, the domestic production of rare earth permanent magnets has grown steadily

Since the industrialization began in the 90s of the last century, China's NdFeB permanent magnet production has grown rapidly, relying on the advantages of upstream raw materials and manufacturing capacity, China's NdFeB permanent magnet production in 2000 topped the world's first, and maintained a growth rate higher than the global output, and the market share has steadily increased.

According to the data of the China Rare Earth Association, the output of permanent magnets in China's system in 2019 was about 179,000 tons, a year-on-year increase of about 5%, and a compound growth rate of 9% in the past 10 years. In terms of product types, the output of sintered NdFeB is 170,000 tons, bonded NdFeB is 7,900 tons, and samarium cobalt permanent magnets are about 2,400 tons, and sintered NdFeB accounts for about 95% of the total output of rare earth permanent magnets.

There are three periods of rapid growth in domestic NdFeB production, 2002-2007 is driven by rapid demand penetration driven by high growth, domestic production from 17,000 tons in 2003 to 50,000 tons in 2007, 2008 global financial crisis led to a decline in production. From 2009 to 2011, due to the growth of domestic demand driven by the domestic economic stimulus plan, the output returned to growth, and the output increased to about 90,000 tons in 2011, but due to domestic policy changes, the price of rare earth rose more than 10 times, and the high price affected the downstream demand, resulting in a rapid decline in output growth. From 2014 to 2015, as the price of rare earth fell to a relatively low level, the downstream suppressed demand was gradually released, and the growth of energy-saving elevators, wind power products and China's automobile production all drove the demand recovery to varying degrees, and the domestic demand for NdFeB magnets returned to medium and high speed growth. After 2016, rare earth prices maintained the bottom shock, the cost side no longer had a large interference with demand, and the output of NdFeB permanent magnets entered a stage of steady growth.

The export volume of NdFeB permanent magnets accounted for about 30%.

China has the world's most complete rare earth permanent magnet industry chain, is the world's most important producer of NdFeB permanent magnets, in 2019 China's output accounted for more than 85%, other producers are Japan and Germany, the output of 13,900 tons, 6,600 tons, respectively, so China's magnets are mainly exported and processed into motors to meet global demand. In 2019, the product volume of China's NdFeB magnet series reached 40,700 tons, of which the export volume of NdFeB products was 35,300 tons, and the export volume of NdFeB alloy magnetic powder was 4,982 tons. In 2020, despite the impact of the epidemic, the export volume returned to above the normal level from the second quarter, and the export of rare earth permanent magnet products was 40,800 tons, which was basically the same as that of the same period last year, of which the export of NdFeB permanent magnets was 36,000 tons, a year-on-year increase of 2.0%; Since 2011, China's NdFeB permanent magnet exports have maintained a growth trend as a whole, and the export growth rate has declined, on the one hand, it is related to the export of terminal products such as processed motors, and on the other hand, the reason is that the export volume of low-end products has decreased, and the export of high-end finished material products has increased.

In terms of export value and average export price, 2020 was basically the same as in 2019, and in the first half of 2020, the impact of the epidemic was greater, resulting in lower prices, and in the second half of 2020, the export value and price increased rapidly, and the average export price of export products for the whole year remained flat at US$46.6/kg. The export price of NdFeB permanent magnets is highly correlated with the price of rare earths, and the increase in the proportion of high-end has also raised the overall export price to a certain extent.

In terms of export countries, the top five and top ten buyers accounted for 63% and 85% respectively in 2020, of which Germany, Japan and the United States were the top three countries, importing 5,893 tons, 4,928 tons and 4,924 tons respectively, and are expected to exceed 5,000 tons in 2021.

Under the trend of carbon neutrality, the rise of new energy demand has promoted a new round of rapid growth of rare earth magnets

Sintered NdFeB Yong