China’s sintered NdFeB magnetic material industry experienced a month-over-month decline in production during August 2025, with total output reaching 29,599 metric tons, down approximately 6.3% compared to July. Despite this overall decrease, top-tier enterprises continued to consolidate their market advantages in this critical rare earth magnet sector, according to data from SMM’s frontline survey.
The production decline comes amid significant cost pressures, weakened seasonal demand, and intensified export policy barriers that have created structural challenges within the industry.
Production Structure Shows Industry Concentration
The NdFeB industry exhibited a high degree of concentration in August, with top-tier enterprises dominating the market share. These leading companies produced 20,904 metric tons, accounting for 70.45% of the total national production. Mid-tier enterprises contributed 6,997 metric tons or 23.74% of production, while small-tier enterprises represented only 5.81% of the total output.
This concentration reflects an emerging trend where orders are increasingly shifting toward top-tier enterprises, reinforcing the industry pattern of “the strong growing stronger.” These leading companies maintain significant advantages in both production volume and technology.
Operating rates across the industry showed downward pressure. The national average operating rate for sintered NdFeB plants in August 2025 was 69.24%, down 4.69% month-over-month. By enterprise size, top-tier enterprises operated at 67.34% capacity, mid-tier at 66.97%, and tail-end enterprises at just 62.13%.
Export Market Faces Challenges
On the export front, China exported 5,791.8 metric tons of rare earth products in August. Although official magnetic material export data has not been released, based on historical patterns, magnetic material exports in August 2025 are expected to remain flat month-over-month at approximately 5,200 metric tons.
From January to July 2025, total magnetic material exports reached 27,890.6 metric tons, representing a 14% decline compared to the 32,813.07 metric tons exported during the same period in 2024. This reduction primarily stems from escalated China-US tensions following Trump’s return to office in 2025, resulting in hefty US tariffs and Chinese export controls that suppressed export demand throughout the first half of the year.
- Total NdFeB production in August 2025: 29,599 metric tons (down 6.3% MoM)
- Top-tier enterprises produced 70.45% of total output
- National average operating rate fell to 69.24% (down 4.69% MoM)
- January-July 2025 exports declined 14% year-over-year
- Pr-Nd alloy prices averaged 638,636 yuan/mt in July-August
Key Factors Driving Production Decline
Several interconnected factors contributed to the decline in magnetic material production in August. Most significantly, manufacturers faced substantial pressure on the cost side, with prices of NdFeB raw materials such as Pr-Nd oxide and Pr-Nd alloy remaining elevated throughout July and August.
Pr-Nd alloy, a critical input, maintained a monthly average price of 638,636 yuan per metric ton, with consecutive sharp increases during this period. These high costs generated noticeable wait-and-see sentiment among end-users, with many non-urgent orders being temporarily postponed as enterprises prioritized inventory consumption.
Simultaneously, end-use demand entered the traditional off-season. Domestic new energy vehicle production and sales continued to decline in August. The home appliance sector, particularly air conditioners, gradually reduced production as summer ended. The 3C electronics sector, lacking stimulus from new models, experienced saturated production with relatively small increments in demand.
Industrial sectors including wind power and industrial robots were affected by hot summer weather, which reduced factory operating rates and weakened support for NdFeB permanent magnet orders.
Export Policy Barriers Intensify Industry Division
Policy barriers in the export market have intensified internal divisions within the industry. Although demand exists from regions like Europe and the United States, with exports expected to maintain relatively high levels, the current policy requiring declaration for NdFeB magnetic materials has resulted in export licenses being concentrated among leading large enterprises.
Small and medium-sized enterprises struggle to obtain these licenses, leaving them uncompetitive in export markets. This disadvantage has led to insufficient operating rates among smaller producers, exacerbating the overall decline in national production.
The trend of export orders concentrating in top-tier enterprises, while consolidating their dominant position, objectively constrains overall capacity utilization. The pace of capacity expansion among top-tier enterprises has been unable to fully compensate for the market void left by the exit of small and medium-sized enterprises in the short term.
The intensification of export policy barriers has exacerbated structural differentiation within the industry, becoming a key institutional factor affecting overall production.
Raw Material Costs Suppress Production
High raw material costs emerged as the primary factor suppressing production. As a key input for NdFeB magnetic materials, price fluctuations of Pr-Nd alloy directly affect production costs and profit margins of magnetic material enterprises.
The average high price of 638,636 yuan per metric ton throughout July-August far exceeded historical levels for the same period. Coupled with consecutive price surges during this time, these elevated costs imposed significant pressure on downstream magnetic material enterprises.
Faced with such high raw material prices, end-use application enterprises showed significantly reduced purchase willingness. Apart from essential orders, many customers chose to postpone procurement plans, prioritize digesting their own inventory, and wait for price adjustments.
This wait-and-see sentiment propagated upstream along the industry chain, directly reducing orders for magnetic material enterprises and forcing them to adjust production plans and lower operating rates.
Seasonal Demand Weakness Across Multiple Sectors
Seasonal demand weakness combined with sluggish performance across multiple application sectors collectively led to an overall pullback in domestic demand in August. As a key growth driver for high-performance NdFeB magnetic materials, the new energy vehicle sector saw continued declines in both production and sales, reducing direct consumption of magnetic materials.
In the home appliance sector, particularly air conditioner manufacturing, production schedules were gradually adjusted downward as the peak summer consumption season ended, lowering demand for related magnetic components.
The 3C electronics market, lacking stimulation from revolutionary new models, reached saturation in overall production, making it difficult to provide significant incremental demand for magnetic materials.
Although long-term demand remains positive in industrial sectors such as wind power and industrial robots, August was similarly constrained by high summer temperatures. Factories in many regions adjusted operating hours or reduced production loads to cope with extreme heat and electricity peak periods, indirectly reducing short-term order demand for NdFeB permanent magnets.
Background
China’s NdFeB magnetic material industry has been experiencing structural contradictions characterized by “low-end surplus and high-end shortage.” This has created an environment where top-tier enterprises with advanced technology and production capabilities continue to strengthen their market position, while smaller players face increasing challenges.
The industry has been significantly impacted by geopolitical tensions, particularly between China and the United States. The return of the Trump administration in 2025 has led to increased tariffs on Chinese goods and subsequent export controls from China, creating additional hurdles for manufacturers.
Raw material price volatility has been a persistent challenge, with rare earth elements like praseodymium and neodymium seeing significant price increases throughout 2025. These materials are essential components in the production of high-performance magnets used in various advanced technologies.
What’s Next
Looking ahead, the rare earth permanent magnet industry is undergoing an adjustment period triggered by structural contradictions. This period of industry involution is expected to gradually ease between 2026 and 2028, driven by policy-driven capacity exits, the emergence of new demand, and technological breakthroughs.
In the short term, although rare earth raw material prices have pulled back slightly from their highs, supply remains tight due to constraints such as mining quotas, reduced imports of ore, and environmental protection policies. Downstream demand is expected to strengthen month-over-month as the market enters the traditional peak consumption season, which will support magnetic material prices.
In the long run, the rapid development of industries such as new energy vehicles, wind power, and robotics will continue to drive growth in rare earth demand. The global NdFeB supply-demand gap may persist and widen over time, giving top-tier enterprises with resources, technological expertise, and customer barriers a competitive advantage in this evolving market landscape. [Source]
