Rare earth permanent magnet material is the largest consumption area of rare earth. In 2011, the rare earth price rose sharply, which made the cost of rare earth permanent magnet downstream enterprises significantly increased. Some enterprises make use of other substitute materials (such as ferrite), and the penetration of rare earth permanent magnet material in some downstream industries has declined. But we expect 2014-2015 years rare earth price volatility reduction to promote the healthy development of rare earth terminal application field, thereby stimulating the growth of rare earth permanent magnet materials and other deep-processing products demand. We believe that the growth of demand mainly comes from the expansion of market scale brought by the development of new industries such as energy conservation and environmental protection, and the penetration of NdFeB permanent magnet in the downstream industry. In 2014/2015, the demand for NdFeB permanent magnetic materials was 92 thousand and 800 tons and 100 thousand tons, respectively, an increase of 10% and 8% respectively.

        Rare earth permanent magnet materials before the mature applications mainly for Nd-Fe-B permanent magnet (NdFeB) of the rare earth elements consist of about 30% and 2% of dysprosium praseodymium neodymium. NdFeB permanent magnet materials in wind power, energy-saving appliances, automobile special rare earth resistance (EPS), widely used, new energy vehicles and other energy-saving and environmental protection fields in addition, application of voice coil motor (VCM) drives, CD-ROM drive, micro motor and other consumer electronics field, and electro acoustic equipment, magnetic separator, electric tools and MRI and other traditional areas. At present, the main competitor of Nd-Fe-B permanent magnet material is ferrite. In 2012, the total market size of the permanent magnet was about 1 million tons, and NdFeB accounted for 90 thousand tons, accounting for less than 10%.

        The development of new energy vehicles is the main engine of the new demand for ndfeb. China has introduced policies to encourage the development of new energy vehicles in the past two years, including:

        The special plan of electric vehicle science and technology development "12th Five-Year", the development of China's new energy vehicles will be through the pilot, hybrid vehicle industrialization and pure electric drive commercial commercialization of the three step development model.

        In February 2014 8 the Ministry issued the second batch of new energy vehicles in the city to promote the application list, including Shenyang, longevity. In addition, the government increased the original subsidy policy for new energy vehicles, -2014 and 2015 subsidy standards decreased by 10% and 20% from the previous standard in 2013, adjusted to decrease by 5% and 10%.

       "Energy-saving and new energy automotive industry development plan (2012-2020)", clearly to 2015 pure electric vehicles and plug-in hybrid cars cumulative production and sales reached 500 thousand vehicles by 2020, pure electric vehicles and plug-in hybrid car production capacity has reached 2 million, the cumulative production and sales of more than 5 million vehicles.

       The development of new energy vehicles is expected to significantly increase the demand for NdFeB magnets. The average NdFeB magnet required for every new energy vehicle motor is about 3 times as much as that of the traditional power vehicle. We assume that the output of China's new energy vehicles in 2014 and 2015 is 200 thousand and 240 thousand, respectively. Therefore, the demand for NdFeB permanent magnet material is about 1000 tons and 1200 tons. However, the Chinese government expects to reach 2 million tons by 2020, and the annual consumption of NdFeB will reach 10000 tons.

       The permanent magnet direct drive motor with re wind power is the main part of NdFeB permanent magnet. The field of wind power is applied to the field of Nd-Fe-B permanent magnetic materials is relatively new, NdFeB in wind electric motor in the amount is relatively large, a 1.5MW permanent magnet direct drive wind power motor requires 1 tons of NdFeB permanent magnetic material. According to China's new material industry development plan, during the period of 12th Five-Year, more than 60 million of China's wind power installed capacity, the Ministry of industry is expected to require 40 thousand tons of rare earth permanent magnet material. In addition, according to the NdFeB industry data, motor current is mainly used in wind power doubly fed motor power, as of 2012 the market share accounted for 80%, the follow-up maintenance cost of DFIG is relatively high compared to permanent magnet direct driven wind turbine is not suitable for the low wind speed area of Chinese.           Therefore, the permanent magnet motor point of wind power penetration further increase is expected to increase demand of Nd-Fe-B permanent magnetic materials. We expect that the new wind turbines in China using permanent magnet direct drive motors will be 10 million KW and 15 million KW respectively in 2014/2015, thus increasing the demand for Nd-Fe-B permanent magnet blanks to be 16667 tons and 25000 tons respectively.

        NdFeB permanent magnet material is mainly used in inverter air conditioner compressor in the field of energy-saving appliances. Because of its high sensitivity to cost. At present, the main high-end inverter air conditioner using Nd-Fe-B permanent magnet materials, such as Daikin Air conditioning. The sharp rise in rare earth prices in 2011 also led China's air conditioning industry leader - Midea and GREE back to ferrite production mode. However, due to the energy efficiency advantages of NdFeB permanent magnet air conditioner, the cost of using the NdFeB permanent magnet variable frequency air conditioner for 2 years will make up for the initial cost higher than that of the ferrite inverter air conditioner. Therefore, we believe that with the strengthening of public awareness of energy efficiency and China before the rare earth price stabilization, Midea and GREE Chinese leading air conditioning manufacturers will return to the NdFeB material to production of more energy-efficient inverter air conditioner.

         In 2013, the total output of air conditioners in China was 140 million units, and the frequency conversion air conditioners accounted for 51.6% of the total air conditioning sales (NDRC). Suppose that the permeability of NdFeB permanent magnet variable frequency air conditioner in 2014 and 2015 reached 25% and 27% respectively, then the output of inverter air conditioner in China reached 36 million units and 40 million 300 thousand units. According to each air conditioning needs NdFeB permanent magnet 0.25 kg measurement, we expect in 2014 and 2015 frequency conversion air-conditioning NdFeB permanent magnet material demand will increase 15000 tons and 16800 tons.

         Steering power is provided by the electric resistance system when the vehicle is turned. Different from the traditional hydraulic steering system (HPS). EPS only provides power when steering, which can significantly reduce fuel consumption. In addition, the electric power steering system can make the high speed steering of the portable chicken keep stable when the car turns vulgar. EPS

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