Neodymium Price Increase Explanation Letter to Valued Customers

Dear Valued Customer,

You may already feel that recently our prices for Rare Earth Neodymium magnets have increased quickly and the validity of price is shortened.

We understand this may have caused inconveniences. However, we think it’s necessary to explain the current situation and also express our forecast to you and your clients.

Current situation:

Attached please find the price chart of PrNd that we have collected on weekly basis since year 2016. It shows price increased from CNY315/KG to CNY390/KG from October 2016 to May 2017, then today’s price is CNY550/KG. This means it takes 9 months for a price increase of 24%, but another 40% increase takes place only in the recent 2 months!

PrNd-Pricing-Chart

PrNd-Pricing-Chart

Also, attached we send you another file which is collected on monthly basis.

These are the prices of PrNd that quoted by the China’s biggest Rare Earth mine: Inner Mongolia Baotou Steel Rare Earth (Group) Hi-Tech Co., Ltd.

Baotou Steel is the wind vane of China rare earth market and today it quotes CNY535/KG for August price, which is increased by 26.48% compare in July.

BAOTOU-STEEL-PRND

BAOTOU-STEEL-PRND

Further more, 100% Cash in Advance is required when we buy raw materials.

Forecast:

It is possible that te unit price will even increase to CNY600/KG. Some Japanese analysts even forecast increase to US$100/KG.

So it’s time to ask why the increase is so quickly in the last 2 month?

(1) Supply reducing. Neodymium Price Increase Explanation

China government implemented “Purchasing and Storage Mechanism” policy for Rare Earth materials since November 2016.
China Environmental Protection Department continuously strikes “Black” Rare Earth mines and supervises legal mines more strictly.
Because of above factors, many raw materials middle-men holds their spot materials in hands and are waiting for price increase.

(2) Demand increasing. Neodymium Price Increase Explanation

Due to the quick development of HEV(Hybrid Electric Vehicle), the consumption of Rare Earth magnets is increasing, the forecast of increase to 2020 will be 10% minimum each year.
Raw materials middle-men want to hold more materials in hands.

As you can see, we are facing very high pressure from the quick increasing situation and 100% in advance payment terms. Neodymium Price Increase Explanation

Although it is no doubt that MPCO is still able to get enough raw materials for you, we would like to beg your kind understanding that we will only be able to offer 3 days price validity at the moment. We may also need to request 50% advance payment for new orders.

Again, we apologize for all the inconveniences that may have been caused and we hope to work closely with you to go through the current difficult condition together.

If you are interesting about the detailed reasons/forecast of the price increase, please feel free to contact us any time.

Thank you very much.

Best Regards,

MPCO Magnetics Team