Chinese permanent magnet companies benefit from US tariff exemption

Tariffs at a level of 25% on rare earth metal ores imported from the US to China will be removed for a one year starting from May 19th 2020.

After the news broke-out, permanent magnet’s producers shares, such as Youyanxin Materials or Dehong registered price increases reaching the daily limit. Shares of Jinli Permanent Magnet, Sinosteel Tianyuan, Yinhe Magnet and Minmetals Rare Earth also raised substantially.

The US is the major supplier of rare earth metal ores—feedstock for light rare earth processing to China. China’s imports of rare earth metal ores from the US increased 46% year on year in the June-December period of 2019, despite Beijing raising import tariff on rare earths from the US to 25% on June 1st, 2019, from 10% previously.

Demand for praseodymium-neodymium oxide, in China has been strong, with prices around 280,000 yuan/mt.

While the tariff suspension will reduce production costs for most rare earth separation and processing plants, prices of praseodymium-neodymium oxide in China are unlikely to fall.