Rare earth permanent magnets are basically used in almost high-tech industries
Rare earth permanent magnet (the core product is NdFeB) is the most common rare earth material, which consumes about 57% of the total amount of rare earth, and has high added value. More than 85% of the output value of rare earth materials is contributed by rare earth permanent magnets.
In 2021, the cumulative increase of the magnetic materials sector is 105.43%, the cumulative increase of the CSI 300 is -6.91%, and the sector outperforms the benchmark index by 112.34pct. Judging from the trend of a single quarter, the trend of the Q1 and Q2 sectors in 2021 is not much different from the trend of the benchmark index. In Q3, the magnetic material sector outperformed the benchmark by 22.34pct, and in Q4 it outperformed the benchmark index by 75.14pct.
Although it has stepped out of the market, there is a high probability that this high-boom development cycle will continue.
The recent performance forecast released by rare earth permanent magnet enterprises also shows that the market demand for rare earth permanent magnets is growing vigorously. Zhongke Sanhuan predicts that the company will make a profit of 330 million to 490 million yuan in 2021, a year-on-year increase of 155.18%-278.9%; Earth Bear is expected to make a profit of 143 million-160 million yuan, a year-on-year increase of 174.42%-206.76%; Zhenghai Magnetic Materials is expected to be profitable 253 million-293 million yuan, a year-on-year increase of 90%-120%. high-tech industries Rare earth permanent magnets
King of new materials
Aerospace, new energy, military industry, computer hard disks… All the high-tech industries that can be imagined basically use rare earth permanent magnets.
The magnets used in inverter air conditioner compressors are divided into two types: ferrite permanent magnet materials and high-performance NdFeB permanent magnet materials. Ferrite permanent magnet materials have low magnetic properties and are relatively cheap. They are mostly used in the production of low-end inverter air conditioners. High-performance NdFeB permanent magnet materials are currently the permanent magnet materials with the highest magnetic properties and are mainly used in the production of high-end inverter air conditioners.
Inverter air conditioners have rapidly developed into the mainstream of the world’s air-conditioning industry due to their energy-saving, high-efficiency and environmental protection features. In Japan, inverter air conditioners account for as high as 97% of the total air conditioners, and in France, the penetration rate of inverter air conditioners is as high as 90%. The sales penetration rate of household inverter air conditioners in my country is also accelerating, from 45.17% in 2019 to 69.45% in the first 11 months of 2021, but there is still a lot of room for improvement compared with developed countries.
In addition, with the improvement of the performance of inverter air conditioner compressors, the requirements for the magnetic properties of magnets are getting higher and higher. If ferrite permanent magnet materials are used, the amount will increase exponentially. high-tech industries Rare earth permanent magnets
Another example is wind power.
Domestic wind power is currently dominated by three types of doubly-fed units, permanent magnet direct-drive units and semi-direct-drive units. High-performance NdFeB magnets are mainly used in direct-drive and semi-direct-drive wind turbine generators.
According to the Global Wind Energy Council’s forecast of new overseas wind power installed capacity, and based on the completion of the wind energy indicators in the 14th Five-Year Plan in 2025 and the increase in the penetration rate of permanent magnet direct-drive wind turbines to 50% in the future, it is estimated that the global wind power will contribute to 2021-2025. The pull of demand for high-end NdFeB magnetic materials is 14.83%.
New energy vehicles are the most important application scenarios and pulling points for permanent magnet materials in the future.
The motor drive control system is the main execution structure in the driving of new energy vehicles. The drive motor and its control system are one of the core components (battery, motor, and electronic control) of new energy vehicles. The driving characteristics determine the main performance of the vehicle. Whether it is a fuel cell vehicle (FCV), a plug-in hybrid electric vehicle (PHEV) or a pure electric vehicle EV, it is necessary to select a suitable electric motor to improve its cost performance, so the selection of the drive motor is particularly important.
After 2018, Tesla began to switch from induction motors to permanent magnet motors. With high power density, low energy consumption, small size and light weight, the permanent magnet synchronous motor with many advantages has become the absolute mainstream of new energy vehicles. According to the data previously released by the Ministry of Industry and Information Technology, as of 2020, the installed capacity of domestic drive motors will reach 1.463 million units, of which permanent magnet synchronous motors account for 99% of the market share.
On November 21, 2021, the Ministry of Industry and Information Technology issued the “Motor Energy Efficiency Improvement Plan (2021-2023)”, which proposed to accelerate the promotion and application of high-efficiency and energy-saving motors. The key tasks in the notice include vigorously developing a new generation of fans and water pumps that are reasonably matched with high-efficiency and energy-saving motors, and promoting variable-frequency permanent magnet motors with energy efficiency level 2 and above. high-tech industries Rare earth permanent magnets
On the whole, there will still be a large incremental market for rare earth permanent magnet materials in the future.
According to Frost & Sullivan’s data, the compound growth rate of China’s domestic magnetic material output from 2016 to 2020 is 5%. It is estimated that the domestic market size will reach 1.361 million tons in 2021, a year-on-year increase of 8.27%. The compound growth rate will increase in the next five years to 7.6%.
Domestic magnetic materials occupy the vast majority of the global market share, and the production scale is expected to account for 75.5% of the world in 2021, and is expected to increase to 82% by 2025.
There are more than 200 sintered NdFeB manufacturers in China, but most of them are small in scale and low-end in technology, focusing on low-end products and fierce competition. High-end production capacity is mainly concentrated in the hands of leading enterprises such as Zhongke Sanhuan, Ningbo Yunsheng, Zhenghai Magnetic Materials, and Jinli Permanent Magnet. In the overseas market, only a few companies such as Japan’s Shin-Etsu Chemical, Hitachi Metals, TDK, and Germany’s VAC are involved.
As of the end of 2020, Jinli Permanent Magnet has a rough production capacity of 15,000 tons. It is planned to reach 23,000 tons in 2022 and 40,000 tons in 2025. If the production expansion plan goes smoothly, it is estimated that the company’s market share will reach 40.6% in 2025, and the company’s industry position will be consolidated and improved.
The quality of NdFeB permanent magnets has an important impact on the product performance of end customers. Downstream customers have a strict evaluation mechanism for supplier selection, which will be verified from the aspects of material yield, performance and quick response ability. The industry basically adopts a customized production model, and the verification process of downstream customers is complicated and the cycle is long, so manufacturers and downstream customers generally have long-term cooperation.
At the same time, due to the wide range of applications of magnetic materials, different product parts have different requirements for magnetic materials, and it is difficult for new entrants to provide customers with complete solutions to meet different needs. Once the capabilities and product performance of NdFeB magnets are recognized, downstream customers will not easily change manufacturers in order to maintain the stability of their product performance and have strong customer stickiness.
In the field of new energy vehicles, Jinli Permanent Magnet is a magnet supplier for new energy vehicle drive motors such as Tesla, BYD, and Bosch Group. SAIC, Weilai, and Li Auto are all end users of the company. The company is also a supplier of Volkswagen MEB and GM. Designated magnet supplier for BEV3 platform. The company maintains a stable cooperative relationship with high-quality customers in the industry, and enjoys a first-mover advantage in future competition.
Zhenghai Magnetic Materials is also deeply involved in the field of new energy vehicles.
According to the information disclosed by Zhenghai Magnetic Materials, the company’s high-performance NdFeB permanent magnet materials are mainly used in the high-end application fields of “three energy” such as new energy, energy saving and intelligence, including energy saving and new energy vehicles, EPS and other automotive electrification products, Inverter air conditioners, wind power generation, energy-saving elevators, automation and smart consumer electronics, etc., the company’s products currently account for more than 50% of the automotive market (of which energy-saving and new energy vehicles account for more than 30%).
The industry is a trump card in foreign relations. The first “232 investigation” launched after Biden took office targeted rare earth permanent magnet materials, but it is unrealistic to get rid of dependence on China in the short term. Stuck in key technologies, tightened capacity scale, and optimized competition pattern, these are the three basic principles for future industry development. In this context, the operating environment of the entire industry is certainly not bad.
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