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Zhenghai Magnetic Materials Sees Soaring Profits Amid New Energy Vehicle Boom and Rare Earth Market Fluctuations

Zhenghai Magnetic Materials, a prominent player in the magnetic materials sector, recently unveiled their 2022 performance report, demonstrating impressive growth. The firm’s total operating income surged by 87.52% to CNY 6.32bn year-on-year. This remarkable increase also extended to the company’s operating profit, net profit, and earnings per share.

The impetus behind Zhenghai’s success stems from the swift expansion of new energy vehicles, coupled with a rise in sales of high-performance neodymium-iron-boron (NdFeB) permanent magnet materials. Furthermore, escalating product prices contributed to a significant uptick in both revenue and profits compared to the previous year.

Throughout the reporting period, Zhenghai Magnetic Materials’ financial standing remained robust. The company’s total assets and shareholder equity rose by 73.95% and 30.05%, respectively. A key driver for these substantial increases was the firm’s growing business operations and successful convertible corporate bond issuance.

In 2022, the growing demand for NdFeB permanent magnet materials bolstered the company’s performance. The price of these materials is susceptible to fluctuations in praseodymium oxide pricing. With demand for NdFeB exceeding 300,000 tonnes and praseodymium oxide surpassing 100,000 tonnes, a considerable supply-demand gap emerged in the rare earth market, leading to wide-ranging price fluctuations for mainstream rare earth products.

The rare earth market experienced a sharp price hike in Q1 2022, driven by strong demand from downstream sectors. In Q2, however, a weakened demand led to a fall in prices. Q3 saw further declines due to energy consumption controls and power cuts limiting production. Despite this, prices experienced a resurgence in Q4, primarily because of constrained supply and pre-holiday inventory build-up.

Recent continuous declines in rare earth prices have cast a shadow of pessimism over the market. As downstream orders remain stagnant and market confidence dwindles, the short-term outlook for the rare earth market’s price trajectory appears weak.

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