Partial Capacity Achieved for Rare Earth Permanent Magnet Manufacturing Project

What is the Intelligent Manufacturing Project for High-Performance Rare Earth Permanent Magnets?

Ningbo Yunsheng has embarked on a transformative journey with its intelligent manufacturing project for high-performance rare earth permanent magnet materials in Baotou. This strategic initiative represents a significant advancement in the company's production capabilities, establishing itself as a cornerstone of China's mining industry evolution.

Project Overview and Investment

The "Baotou Yunsheng Technology Development Co., Ltd. Annual Production of 15,000 mt High-Performance Rare Earth Permanent Magnets Intelligent Manufacturing Project" stands as an ambitious undertaking backed by substantial capital investment. The company secured 1.045 billion yuan through a 2022 private placement of A shares specifically to fund this project, demonstrating strong investor confidence in the company's strategic direction.

The project's implementation has been methodically planned to balance speed with quality control, ensuring that each phase meets rigorous production standards before advancing to the next stage of development.

Current Implementation Status

As of June 2025, Ningbo Yunsheng has successfully completed the first phase of its intelligent manufacturing project, with 5,000 metric tons of production capacity now fully operational. This significant milestone includes the completion of equipment installation, comprehensive debugging procedures, and successful trial production phases for the initial production workshop.

The company's board approved a revised implementation timeline on April 29, 2024, and the project has remained on schedule despite the complexity involved in establishing advanced manufacturing facilities. This adherence to timeline demonstrates Ningbo Yunsheng's effective project management capabilities even when handling large-scale industrial implementations.

"The partial operation of this project will allow the company to translate its technological and quality advantages into product advantages on a larger scale, promoting market share growth and strengthening profitability and competitiveness."
— Ningbo Yunsheng official announcement

How Will This Project Impact Ningbo Yunsheng's Market Position?

The intelligent manufacturing project represents more than just increased production capacity—it signals Ningbo Yunsheng's strategic positioning for long-term market leadership in the high-performance permanent magnet sector. With global demand for rare earth magnets continuing to rise, particularly in high-growth industries like new energy vehicles, this expansion arrives at a critical juncture.

Enhanced Production Capabilities

The partial operation of this intelligent manufacturing facility transforms Ningbo Yunsheng's production landscape. By implementing advanced automation systems and data-driven mining operations, the company can now achieve greater economies of scale while maintaining consistent quality standards—a critical advantage in an industry where performance specifications are increasingly stringent.

This expansion enables the company to better meet growing market demand, particularly from the booming new energy vehicle (NEV) sector where their products have already gained significant traction. The intelligent manufacturing approach also allows for greater production flexibility, enabling more rapid response to changing market requirements and specifications.

Competitive Advantages

With the new facility's advanced capabilities, Ningbo Yunsheng can now leverage its technological expertise and quality standards across a significantly larger production volume. This scale-up preserves the company's reputation for excellence while enabling it to compete more effectively on volume and potentially price.

However, the company has provided a measured outlook to investors, acknowledging that reaching full production capacity of 15,000 metric tons will require time. Management has also highlighted persistent market uncertainties, particularly regarding future demand fluctuations and raw material pricing volatility—factors that could impact the project's long-term performance metrics.

Financial Impact and Performance Indicators

The project's initial phase comes at a promising time for Ningbo Yunsheng's financial trajectory. In Q1 2025, the company reported operating revenue of 1.122 billion yuan, representing a 9.36% year-over-year increase. More significantly, the company achieved a net profit of 37.22 million yuan, marking a return to profitability after previous challenges.

Gross margins have also shown improvement compared to the previous year, indicating that the company's operational efficiency strategies are yielding positive results. These financial indicators suggest that Ningbo Yunsheng is well-positioned to leverage its expanded production capacity for further growth.

What Markets Does Ningbo Yunsheng Serve with NdFeB Permanent Magnets?

Ningbo Yunsheng has strategically diversified its market presence across several key sectors, though with notably different performance trajectories. This diversification provides both stability and growth opportunities as market conditions fluctuate across industries.

New Energy Vehicle Applications

NdFeB permanent magnets for new energy vehicle applications have emerged as Ningbo Yunsheng's strongest performing market segment by a significant margin. In Q1 2025, this segment generated sales revenue of 574 million yuan, representing an impressive 43.14% year-over-year increase.

The company's shipments in this period supported approximately 612,000 main drive motors for NEVs, establishing an estimated 25.3% market share in the domestic passenger NEV main drive market. This calculation is based on China Passenger Car Association's reported 2.421 million NEV retail sales from January to March 2025.

The robust performance in this sector aligns with China's accelerating transition toward electric mobility, positioning Ningbo Yunsheng as a key beneficiary of this structural market shift. The company's success in securing significant market share in NEV applications demonstrates its ability to meet the exacting quality and performance requirements of automotive manufacturers.

Consumer Electronics Applications

The consumer electronics segment presents a more challenging picture for Ningbo Yunsheng. In Q1 2025, this division recorded sales revenue of 154 million yuan, representing an 18.09% year-over-year decrease.

This decline reflects broader challenges in the global consumer electronics market, which has faced headwinds from changing consumer spending patterns, extended replacement cycles, and inventory adjustment cycles among major device manufacturers. Despite these challenges, consumer electronics remains an important market segment for the company's permanent magnet products, particularly in applications like smartphone vibration motors, speakers, and headphones.

Industrial and Other Applications

The industrial applications segment has also experienced contraction, with Q1 2025 sales revenue of 304 million yuan reflecting a 15.32% year-over-year decrease. This segment encompasses various industrial motors, automation equipment, and other specialized applications that utilize high-performance permanent magnets.

The decline in this sector may reflect cyclical factors in industrial investment and potentially increased competition from both domestic and international suppliers. Despite the current challenges, industrial applications remain a substantial component of Ningbo Yunsheng's business, representing approximately 27% of Q1 2025 revenue.

What Are Ningbo Yunsheng's Strategic Growth Plans?

Ningbo Yunsheng has outlined a comprehensive strategic roadmap focused on leveraging its expanded production capacity, technological advantages, and market position to drive sustainable growth. These strategies span market development, production enhancements, and research initiatives.

Market Expansion Strategy

According to the company's 2024 annual report, Ningbo Yunsheng is pursuing a multifaceted market expansion strategy centered on four key pillars:

1. Core market consolidation: Strengthening its position in existing application areas where it has established expertise, particularly in the rapidly growing NEV sector.

2. "Major customers" strategy: Cultivating deeper relationships with key clients to secure stable, long-term demand and collaborative development opportunities.

3. Emerging applications exploration: Actively pursuing opportunities in emerging "new quality productive forces" segments, with particular focus on:

   • Humanoid robots, which require high-performance magnets for motors and actuators
   • Electric vertical takeoff and landing (eVTOL) aircraft, an emerging market with stringent requirements for lightweight, high-performance components

4. Value chain expansion: Moving beyond raw magnets into higher-value magnetic assemblies and related supporting services, capturing more of the value chain.

This balanced approach allows Ningbo Yunsheng to defend and grow its core business while positioning for emerging opportunities that leverage its technological capabilities.

Production Capacity Enhancement

Beyond the current intelligent manufacturing project, Ningbo Yunsheng has outlined several initiatives to further enhance its production capabilities:

• Technological upgrading of existing production lines to improve efficiency and quality
• Enhanced automation and intelligence in manufacturing processes to reduce costs and increase consistency
• Expanded production capacity for specialized magnetic assemblies, with particular emphasis on segmented magnets that meet the requirements of high-efficiency motors
• Accelerated implementation of advanced processes such as:
  • Grain boundary diffusion technology
  • Alloy diffusion processing
  • New-generation cutting processes that reduce material waste and improve dimensional precision

These production enhancements aim to improve both output volume and product performance while optimizing resource utilization.

Research and Development Initiatives

Ningbo Yunsheng's R&D strategy focuses on several key areas that address both immediate market needs and longer-term technological evolution:

• Ultra-high-performance magnets with enhanced service characteristics for demanding applications
• Advanced grain boundary diffusion technology to reduce dependence on critical minerals energy transition like dysprosium and terbium
• Material efficiency innovations to reduce heavy rare earth usage in medium-to-high coercivity magnets
• Heavy rare earth-free alternatives, including research into dysprosium-free and terbium-free products
• Manufacturing process optimization through high-precision forming and low-loss processing technologies
• Application-specific surface protection technologies designed for different operating environments
• Cost reduction through optimized manufacturing processes and material utilization

These R&D initiatives demonstrate Ningbo Yunsheng's commitment to addressing industry challenges while advancing the state of the art in permanent magnet technology.

How Do Raw Material Price Fluctuations Impact the NdFeB Industry?

The NdFeB permanent magnet industry operates within a complex ecosystem where raw material price fluctuations can significantly impact manufacturing costs, pricing strategies, and ultimately profitability. Understanding these dynamics is essential for evaluating Ningbo Yunsheng's position and prospects.

Recent Praseodymium-Neodymium Oxide Price Trends

Praseodymium-neodymium (Pr-Nd) oxide, a critical raw material for NdFeB permanent magnets, has experienced notable price volatility over recent years:

This data reveals several important trends:

1. Significant year-over-year decline (2023-2024): The average price of Pr-Nd oxide fell substantially in 2024, with the daily average declining by nearly 26% compared to 2023.

2. Recent recovery (Q1 2025): Prices have rebounded in early 2025, with the Q1 daily average increasing by 12.57% compared to the same period in 2024.

3. Substantial volatility: The market has experienced swings of more than 10% over relatively short periods, creating challenges for cost planning and pricing strategies.

These price movements directly impact the raw material costs for NdFeB magnet manufacturers like Ningbo Yunsheng, potentially affecting margins if the changes cannot be passed through to customers.

Current Market Dynamics

As of June 27, 2025, the rare earth market is experiencing several key dynamics that influence both current pricing and future expectations:

• The average price of Pr-Nd oxide stands at 444,500 yuan/MT, reflecting a slight decline of 0.11% from the previous day but maintaining the general recovery seen in early 2025.

• Supply constraints: Imports from Myanmar have decreased due to the traditional rainy season in Southeast Asia, creating temporary supply tightness in the market.

• Seller behavior: Most suppliers are showing reluctance to sell at current prices, anticipating potential future price increases.

• Buyer hesitation: Market activity has been sluggish with limited buyer inquiries, creating a standoff between supply and demand.

• Short-term pressures: Some suppliers have reduced prices for small-volume sales to meet month-end cash flow requirements, creating temporary price anomalies.

• Market sentiment: Despite current challenges, most industry participants remain optimistic about future rare earth prices, viewing current conditions as transitional rather than structural.

• Seasonal factors: The market is transitioning out of the traditional off-season, with expectations of increased activity in coming months.

These complex and sometimes contradictory factors create a challenging environment for companies like Ningbo Yunsheng to navigate, requiring sophisticated procurement strategies and pricing policies.

What Are the Long-Term Prospects for the Rare Earth Permanent Magnet Industry?

The rare earth permanent magnet industry stands at an inflection point, with powerful growth drivers balanced against supply chain challenges and technological evolution. Understanding these dynamics is crucial for evaluating Ningbo Yunsheng's long-term prospects.

Market Growth Drivers

Several structural factors support continued growth in the rare earth permanent magnet industry:

• Electrification momentum: The global transition toward electric vehicles continues to accelerate, creating substantial demand for high-performance NdFeB magnets in traction motors and other automotive applications.

• Industrial automation expansion: Growing adoption of industrial robots, automated manufacturing systems, and smart factory technologies drives demand for efficient motor systems that rely on high-performance magnets.

• Renewable energy growth: Wind turbines, particularly direct-drive designs, require substantial quantities of NdFeB magnets, and global renewable energy targets support continued capacity expansion.

• Consumer electronics evolution: Despite recent market challenges, the long-term trend toward smaller, more powerful devices continues to drive demand for high-performance magnets in compact motors and speakers.

• Emerging applications: New technologies like humanoid robots, eVTOL aircraft, and advanced medical devices create entirely new market segments for NdFeB magnets with specialized performance requirements.

Industry participants generally maintain a positive outlook on long-term prospects, with SMM reporting that "most industry insiders are optimistic about the future price of rare earths" and "the rare earth industry generally maintains a positive and optimistic attitude towards its long-term development prospects."

Supply Chain Considerations

The rare earth permanent magnet supply chain faces several challenges and transitions that will shape future industry dynamics:

• Geographic concentration: China continues to dominate both rare earth mining and processing as well as permanent magnet manufacturing, creating potential supply vulnerabilities for global customers.

• Resource constraints: While rare earth elements are not truly "rare" in terms of abundance, economically viable concentrations are limited, and development of new mines faces substantial lead times and regulatory hurdles.

• Environmental pressures: Both mining and processing of rare earth elements face increasing environmental scrutiny, potentially affecting production costs and availability.

• Recycling initiatives: Emerging technologies for recycling rare earth elements from end-of-life products could eventually provide an alternative supply source, though commercial-scale implementation remains limited.

• Geopolitical factors: Trade policies, export restrictions, and strategic material designations can significantly impact critical minerals supply chain.

Technological Evolution

The rare earth permanent magnet industry continues to evolve technologically in response to both challenges and opportunities:

• Performance enhancements: Ongoing research aims to push the boundaries of magnetic performance, particularly maximum operating temperature and resistance to demagnetization.

• Material efficiency: New manufacturing techniques like grain boundary diffusion allow for reduced use of heavy rare earth elements while maintaining performance characteristics.

• Alternative materials: Research into reduced-rare-earth or rare-earth-free permanent magnets continues, though commercial alternatives have not yet matched NdFeB performance in most applications.

• Application-specific optimization: Tailored magnet designs and manufacturing processes are being developed for specific applications, optimizing performance characteristics for particular use cases.

• Integration innovations: Advanced techniques for incorporating magnets into motor designs and other systems are improving overall system performance while potentially reducing material requirements.

These technological developments may create both opportunities and challenges for established manufacturers like Ningbo Yunsheng, requiring continued investment in R&D to maintain competitive advantages.

FAQ: Rare Earth Permanent Magnets and Ningbo Yunsheng

What are rare earth permanent magnets and why are they important?

Rare earth permanent magnets, particularly neodymium-iron-boron (NdFeB) magnets, are the strongest type of permanent magnets commercially available. They derive their exceptional magnetic properties from the unique electronic structure of rare earth elements, particularly neodymium and, in high-temperature applications, dysprosium or terbium.

These magnets are crucial for modern technologies due to their unmatched magnetic strength-to-weight ratio. This characteristic enables the miniaturization and efficiency improvements in countless applications, from electric vehicle motors and wind turbine generators to hard disk drives and smartphone speakers.

By providing stronger magnetic fields in smaller packages, NdFeB magnets have enabled technological leaps in energy efficiency, device miniaturization, and performance capabilities across multiple industries.

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