Introduction: During the Spring Festival of 2020, the sudden, highly contagious, novel coronavirus pneumonia (new crown pneumonia) epidemic that originated in Wuhan coincided with the Spring Festival and spread rapidly across the country. As of February 13, confirmed cases nationwide There have been more than 50,000 people. Hundreds of cases have been detected and confirmed in Hong Kong, Macao, Taiwan and 24 countries around the world. After the outbreak, many parts of the country have initiated first-level emergency response to fight the epidemic together. In order to avoid large-scale population movements and gatherings, prevention and control measures such as home isolation, extension of the Spring Festival holiday, and postponement of business operations have been adopted. The outbreak and spread of the epidemic and its prevention and control have broken the normal weak and stable development status of China's magnetic materials industry. The entire industry is facing new pressures. The author will analyze several aspects before and after the epidemic for the reference of industry enterprises and colleagues.
1. The overall situation of China's magnetic material industry before the epidemic
In recent years, due to the continued sluggish international market demand and the decline in export demand, on the other hand, the domestic economic structure has adjusted, the economic growth rate has dropped significantly, and the market demand for magnetic materials applications has been weak. Severe test. The magnetic material industry as a whole is in a situation of obvious oversupply and fierce market competition.
In 2019, China's magnetic material industry as a whole is oscillating at a low level. On the whole, the weakness has not yet bottomed out, and it is developing towards a stable trend. However, the various types of soft magnetic materials and permanent magnetic materials involved in the industry show different weather, and the production market for the same products and different enterprises is very polarized.
According to incomplete statistics, at present, there are nearly 1,600 enterprises engaged in the production and operation of various magnetic materials (including powders and raw materials) in China, including soft ferrites (including manganese-zinc and nickel-zinc, magnesium-zinc soft ferrites, powders and Main raw materials) about 320 companies, about 160 magnetic powder core and amorphous nanocrystalline soft magnetic alloy companies, about 340 permanent ferrite companies (including magnets and powders and main raw materials), metal permanent magnets (including rare earth neodymium iron boron) There are about 400 permanent magnets, rare earth samarium-cobalt permanent magnets, aluminum nickel cobalt, iron chromium cobalt and other permanent magnets and main raw materials and magnetic powder) enterprises, about 60 other magnetic material enterprises, and China’s magnetic material products have a certain scale of domestic and foreign economic and trade enterprises More than 300.
Rare earth permanent magnets range from raw materials to products. The industry is still oscillating. Due to patent restrictions, the export of medium and high-end products is not smooth, and the average operating rate of industry enterprises is less than 60%. The production capacity of soft ferrite materials has also been seriously surplus, and demand Not prosperous and fierce competition, the average operating rate of industry enterprises is less than 70%; because rare earth permanent magnets are still relatively expensive compared to permanent ferrites, and exports are restricted by patents, the prices of permanent ferrite raw materials have continued to decrease in the past two years Under the situation of intensified competition in the oversupply market, downstream applications have relatively stable demand for permanent ferrites with relatively high cost performance. After the downturn in 2012, the permanent ferrite industry has entered a steady growth and development since 2013. A small number of companies have sufficient orders, and the average operating rate of industry companies is nearly 80%. The overall situation is relatively good, especially for permanent ferrite magnets for motors, but the market price competition is fierce.
In 2019, there have been some new changes and characteristics in China's magnetic material industry. From the perspective of various related industries:
Rare Earth Permanent Magnet Material Industry
The prices of related light and medium-heavy rare earth varieties used in rare earth permanent magnet raw materials have continued to decline slightly, and many varieties have basically returned to the initial level of price increases, and the market has been a roller coaster; while the rare earth NdFeB permanent magnet market has been quiet , The overall supply exceeds demand, the market competition is fierce, the profits of conventional performance products companies are extremely low, and the overall operating rate is only 60%. In addition, rare earth samarium cobalt permanent magnets are also similar. In recent years, the global sales of smart phones have exploded. Electric vehicles and modern home appliances have become increasingly popular. These new products require high-performance lithium batteries, while cobalt is used to produce lithium. Indispensable raw materials for batteries, the price has doubled, and samarium-cobalt rare earth permanent magnets have also been severely affected. After the third quarter, the cobalt price has continued to slowly adjust from a high level and is currently oscillating at a low level. Because of the special application of samarium-cobalt permanent magnets And the market scale is smaller, the market situation is slightly better than NdFeB rare earth permanent magnets.
It is estimated that in 2019, China's output of rare earth NdFeB sintered permanent magnets will be about 170,000 tons, bonded NdFeB is about 7,000 tons, and samarium cobalt permanent magnets will be about 3,300 tons, a slight increase from the average in 2018.
Ferrite permanent magnet material industry
Due to the relatively high cost of rare earth permanent magnets relative to permanent magnet ferrites, and the export is still subject to patent restrictions. At the same time, due to the huge fluctuations in the supply and price of rare earth permanent magnets, the ferrite permanent magnet industry continues to 2018 Since its steady development in 2016, despite the impact of the Sino-US trade war, most companies still maintained relatively good production and sales in 2019. The raw materials of the strontium and barium salts required for the pre-fired permanent magnet ferrite and the cobalt oxide added to the high-performance ferrite permanent magnet also began to rise sharply from the first quarter, and only began to fall in the third quarter, but the price of traditional magnet products Only a small increase and then a decrease, most companies have an operating rate of about 80%, and a few companies have full orders. It is worth noting that due to environmental restrictions on production and new energy cobalt-lithium batteries that strongly stimulate demand for cobalt, the situation of tight raw material supply and price increases is difficult to change in a period of time. The reduction of capacity and environmental pressure in the steel industry also drives iron red and scale As the price rises, magnet companies will have to adjust their prices upwards, and the different user tolerance will hinder the market of some companies. Fortunately, the fluctuation of raw material prices began to improve in the third quarter, and the prices of some raw materials fell slightly.
It is estimated that China's permanent magnet ferrite output will be about 1.2 million tons (magnet plus powder) in 2019, showing a slight increase compared with 2018.
Soft Ferrite Material Industry
The market demand is not strong in 2019, the production capacity of soft ferrite materials is severely overcapped, and the competition is fierce. The average operating rate of industry enterprises is less than 70%. It is estimated that China's soft ferrite output will be about 360,000 tons in 2019, roughly the same as in 2018.
From the perspective of corporate structure, at present, the production and operation of large and medium-sized joint-stock companies (especially listed companies), private and private enterprises in the industry are relatively good, and most of the small, medium and micro enterprises are more difficult. This is mainly due to the strong strength of large and medium-sized enterprises, diversified products, good reputation, strong customers, guaranteed product quality, and obvious support for new products. Small and medium-sized enterprises have a single product, low production automation level, poor conditions, insufficient technological innovation capabilities, few corresponding high-quality customers, and high elimination rate
It needs to be pointed out that since 2018, the development situation of magnetic industry companies has been quite different, the polarization situation is very prominent, the situation of the entire industry is complex and changeable, and many companies are basically maintaining survival, unprofitable, and difficult to invest in innovation and development. , But there are also about 10% of companies that have maintained a double-digit growth in sales and profits, mainly of which are listed on magnetic materials.
Looking at the entire industry, the market competition in the magnetic material industry is manifested in the increasingly fierce price competition for the homogenization of low-end products. The traditional market and fixed customers are constantly double-squeezed by the upstream price increase and the downstream industry's cost reduction requirements. In order to survive, many companies have to compress their profit margins, constantly bargaining prices and killing each other among their peers. Many companies lose their fixed customers in the competition, making it difficult to survive. However, a small number of mid-to-high-end magnetic products companies with strong technological advantages and high levels of automation have sufficient orders and higher profit margins. The market situation of magnetic material products and devices related to 5G, big data, cloud computing, new energy, and the Internet of Things Better and getting better.
2. The impact of the new crown pneumonia epidemic on China's magnetic materials industry
Since the outbreak of the novel coronavirus infection pneumonia, under the strong leadership of the Party Central Committee with Chairman Xi Jinping at its core, the whole country, all walks of life, and people of all ethnic groups have worked hard to fight the epidemic with all their strength and made initial progress. The prevention and control work has entered a new stage, but the epidemic is still spreading, and the number of newly confirmed cases is still increasing. The inflection point where the epidemic is fundamentally controlled has not yet appeared. The tasks of epidemic prevention and control and other tasks are still very arduous.
While fighting the epidemic, domestic companies in the magnetic materials industry, under the premise of doing a good job in the prevention and control of the epidemic, carefully organized and arranged, gradually started work and resumed production in an orderly manner according to local conditions, and strived to complete the company's annual indicators. The task is more onerous, but continuous development The adverse effects of the epidemic on the healthy development of my country's magnetic materials industry, industries, and enterprises have already appeared in all aspects.
Home isolation, suspension of work and production, postponement of work, disrupting the normal production order of the enterprise
In order to prevent the spread of the epidemic, the National Spring Festival holiday was extended, and the resumption of work in some provinces and cities was further postponed by one to two weeks, and business plans were disrupted. The normal production and operation of domestic magnetic materials industry companies have been suspended, and some companies’ income and cash flow have been interrupted. However, the pressure of rigid payment of rent, wages, social security, interest, equipment depreciation and other expenses will cause some small, medium and micro enterprises to suffer greater losses, which may lead to order contracts Some small and micro enterprises with small size and weaker ability to resist risks in severely affected areas will face the predicament of bankruptcy and bankruptcy. Risks may also be transmitted along the upstream and downstream industrial chains, triggering local crises.
Downstream application market demand stops and declines
As the basic core material of key electronic components, the application market of magnetic materials is mainly concentrated in the coastal South and East China regions where electronic components, components and terminal electronic products companies are most distributed. They are mainly technology and labor-intensive products. From the data point of view, except for Hubei, South China represented by Shenzhen, Guangdong, and East China represented by Zhejiang and Jiangsu, all areas with relatively severe epidemics, the manufacturing industry is greatly affected, and the magnetic material industry companies have a large area of suspension and production. At present, most Enterprises have not resumed work and production, so the demand for magnetic materials for downstream applications during the epidemic has almost stopped. The stop and decline of downstream demand may cause some small, medium and micro enterprises to fall into trouble.
The production of downstream components, components, and end products requires a lot of labor. Due to the different epidemics in different regions, the epidemic control situation is also different. As downstream companies in various regions start to resume work and resume production as conditions permit, some demand will slowly recover.
The supply and marketing contract cannot be executed on time, and the corporate credit is tested
Due to the impact of the epidemic, large-scale magnetic material companies across the country have halted production, especially in areas where the epidemic is severe. Even if the companies that started operations are controlled by the epidemic personnel, most companies have a low rate of staff attendance and cannot complete the year as planned and scheduled. Previous order. Although they are all also affected by the force majeure of the epidemic, they will have an adverse impact on the future cooperation and settlement of the company with upstream and downstream supply and demand parties. Individual companies may also use the epidemic as an excuse to regret their promises.
Logistics is stopped and delayed, and it is difficult to enter and exit raw materials and products
At present, logistics in areas with severe epidemics are almost out of service, except for anti-epidemic materials that can be imported and exported by special management, and other materials are restricted. Logistics in areas where the epidemic is not severe is gradually recovering from the state of suspension, but it is subject to more complicated controls. The supply and demand parties need to report for docking, limit stay time, check along the way, and even require drivers to isolate for a certain period of time, and the guarantee of logistics capabilities is still relatively lagging. Therefore, most of the companies that resumed work cannot enter the factory for raw materials, the products cannot be shipped out, and it is difficult for people and vehicles to move across regions and provinces, especially in Hubei.
At the same time, restricted personnel flow may directly or indirectly lead to an increase in logistics costs across the country. While pushing up prices in the short term, it may also affect the supply chain and post-holiday rework of some enterprises, which may increase production costs.
Human resources crisis
Traditional magnetic material products in the magnetic material industry are mostly labor-intensive products. Most companies have concentrated a large number of production and management personnel. Many large and medium-sized companies have recruited a large number of non-local employees. Subject to the epidemic prevention and control regulations and personnel control regulations during the epidemic, the current national personnel Regional and inter-provincial mobility restrictions are very strict, making it difficult for many companies in areas with severe epidemics to return to their hometowns during the Spring Festival to arrive at their jobs in time. Even if they arrive at the location of the company, they still need to be quarantined for 14 days. More serious, coupled with the psychological impact of the epidemic area and the epidemic on people, some employees will be lost.
Although there are data showing that the number of university, college, and vocational graduates graduating in 2020 may exceed 7 million, China’s economic growth has declined in recent years, the structure of various industries has adjusted, and employment pressure has been high. Due to the special nature of magnetic material manufacturing , As well as factors such as the environment and conditions of the production site and labor intensity. Among these graduates, the number of graduates who can enter the magnetic material company to engage in the production of magnetic materials is very limited, and the company needs a large number of industrial and technical workers. Magnetic materials industry workers and skilled workers are already difficult to recruit. After the epidemic, the labor shortage will become more serious.
Guarantees and restrictions on the conditions for enterprises to resume work and fight the epidemic
At present, the whole country is in a critical period in the nation's fight against the epidemic. Some regions where the epidemic is not serious have begun to resume work and production, and self-rescue against the epidemic. However, according to the needs of the epidemic, all regions have formulated corresponding management policies and measures for enterprises to resume work conditionally. It is necessary to have the basic conditions for the prevention and control of the epidemic for all employees of the company, such as necessary physical health surveys, body temperature testing before reporting to work every day, masks (must be worn by everyone, and other conditions are available in the company, but the current masks are difficult to find. People cannot start work if they have it), protective equipment such as gloves, cleaning and disinfection supplies, and anti-epidemic management measures for the production site, canteen, office site and other enterprises. Only after verification and compliance with the conditions for starting work are approved to resume work conditionally, and the enterprise is required During the resumption of work, it is ensured that there are no employees infected with the virus. In some places, companies are also required to sign a letter of guarantee and commitment. If a virus infection occurs during the resumption of work, the company shall assume full responsibility and suspend production and isolate the entire plant.
The epidemic is still in its second stage of outbreak, but some companies still in panic are eager to resume work, some want to grab orders, and some are due to the backlog of orders and production plans that need to be completed a year ago. If the delivery cannot be made on time, then there will be financial responsibility, and it will also affect the later cooperation, which will seriously cause the factory to go bankrupt. Therefore, even if the government has a work ban, some business owners still risk resuming work. In Tongzhou, Nantong, someone has been detained by the police station for violating the start-up regulations of Jiangsu Province.
From the current point of view, it is more difficult to resume production in severely affected areas. Except for the severely affected area in Hubei, the epidemic situation in East and South China where magnetic material companies and downstream application industries are concentrated is relatively severe compared with other regions, and only a few companies have started operations locally; In Hubei, the hard-hit area, there are also dozens of magnetic material-related companies and some downstream companies in the regional application market, which are basically in a state of shutdown.
Therefore, the resumption of work in the magnetic industry must depend on the epidemic situation and government policies in various places, and make full preparations to start work only if conditions permit, otherwise the virus infection problem will not be lost.
The supply and demand relationship and balance of magnetic materials in the domestic market in the short term
During the epidemic, both the upstream raw material supply and the downstream application companies of the magnetic material industry are under the same living environment conditions, and the supply and demand relationship is basically maintained in the state before the epidemic, basically maintaining a balance.
The impact of the epidemic period on import and export, international exchanges and international trade
After the outbreak of the new coronavirus, the epidemic spread rapidly. On January 31, the World Health Organization announced that based on the two facts that the number of people infected in China has increased and the epidemic has occurred in many countries, it has declared the new coronavirus epidemic as a public emergency of international concern. Health incident (PHEIC). Wuhan and Hubei have been regarded as epidemic areas by many Chinese people, and some countries have regarded China as an epidemic area, and their irrational restrictions on movement have begun to rise sharply. First, the United States began with the evacuation of overseas Chinese from Wuhan, and then many airlines such as Britain, Germany, Finland, and Italy also suspended a large number of Chinese flights. The problem behind this is the emergence of a certain degree of international panic and the interruption of business exchanges. The ongoing epidemic has basically interrupted the domestic and international magnetic industry offline exhibitions and exchanges. The participation of domestic industry enterprises and experts in foreign exchanges has also been severely affected, and the visits of foreign peer companies and experts to China have also been basically interrupted.
Under the current relatively sluggish export situation, overseas countries’ increasing quarantine requirements for my country’s export commodities including magnetic materials, components and terminal products may lead to increased pressure on my country’s exports of magnetic materials, components and terminal products. Of course, looking at it conversely, China is a major global producer and exporter of electronic components. International upstream and downstream users will have a series of problems caused by supply chain disruption in the short term. International downstream users will inevitably become eager to seek third-party supplies. Therefore, the impact and impact of PHEIC on China's economy still mainly depends on the progress and severity of the epidemic and China's epidemic control capabilities and results. China's supply chain of magnetic materials, devices and components is embedded globally. If this piece is loosened and the world creates a backup base, this damage will be irreversible.
Although the current epidemic situation is changeable, the longer-term sting is the tearing of Chinese manufacturing from the fragmentation of the global supply chain. As the epidemic in China is effectively controlled and the World Health Organization lifts China's PHEIC, the situation will soon improve.
The United States is the largest importer of Chinese goods, including magnetic components, components, and numerous electromechanical products. From the perspective of Sino-US relations, there is a possibility of repeated trade frictions between China and the United States.
In March 2018, the United States initiated trade frictions with China. During the period, they were fighting and talking, but the overall situation continued to escalate. The scale of the products that the US imposes tariffs on China continues to expand, and the tax rates continue to rise. They have gone beyond the trade field and upgraded to all-round games such as technological warfare, financial warfare, geopolitical warfare, and public opinion warfare. In 2019, China's exports to the United States were 0.5% and -12.5% respectively, the lowest since 2008. Although China and the United States signed the first phase of the trade agreement in January 2020, and the Sino-US trade frictions continue to be temporarily suspended, the United States still maintains 25% tariffs on approximately US$250 billion of Chinese imports and approximately US$120 billion of Chinese imports. 7.5% tariff. In addition, the two parties in the United States have reached a consensus on containment of China, strongly suppressing Chinese technology companies such as ZTE and Huawei, and are trying to modify the long-arm jurisdiction principle through the deployment of the U.S. Department of Commerce to reduce the scope of control from 25% of American technology to 10%. Once implemented, it means that a large number of Japanese and Korean parts will not be able to supply Huawei. In addition, as a substitute for American components, the total purchase of Japanese and Korean parts by Huawei in 2019 will exceed US$20 billion, an increase of 50% Above, but if subject to the 10% limit, many key components will also be affected; and TSMC is one of Huawei’s most important suppliers, and orders from the United States account for 70% of TSMC’s orders. If TSMC loses its supply, it will be difficult for Huawei to bear . If Huawei, as an important user of magnetic materials and devices in China, is affected, it will undoubtedly affect many magnetic materials and device manufacturers.
It is worth noting that with the signing of the first phase of the Sino-US economic and trade agreement, China will import more than US$200 billion in US goods in 2020 and 2021. This means that the contribution of the trade surplus to China’s economic growth in the short term will be Further down.
New work formats and new life models during the epidemic period promote the development of related industries
Under the influence of the epidemic, new business formats and new models such as e-commerce, e-government, home office, virtual conference/business, and online teaching have emerged as the times require and will usher in a new round of rapid development.
The application of cutting-edge technologies based on the Internet, artificial intelligence, big data, and intelligent robots will further penetrate and expand into various fields such as public life, business operations, government management, education and training. Therefore, in the future, the downstream application industries of related magnetic materials, such as networks, communications, artificial intelligence, big data, smart robots, and remote smart medical care, will continue to develop around new ecology and new business forms.
3. Development trend of China's magnetic materials industry after the epidemic
According to the current situation of the epidemic, it is estimated that around the end of February, an inflection point of the epidemic will appear, and the epidemic will be basically controlled and effectively contained. The impact and impact of the epidemic on China's magnetic materials industry will be concentrated in the first quarter. If the epidemic is basically controlled in the first quarter, the national policy for stable growth and consumption stabilizes, the construction of related investment and construction projects affected by the epidemic will be accelerated. Investment in industries such as roads, education, medical care, and health to stimulate demand, stabilize employment, and improve infrastructure.
After the epidemic, China's magnetic material industry chain will undergo a short period of self-repair and adjustment, and the post-production plan of the magnetic material industry chain will also provide opportunities for China's magnetic materials industry to rebound in the second quarter. It is expected that in the second half of the year, China's magnetic materials industry and the Chinese economy will stabilize and rebound. In the whole year of 2020, the development situation of China's magnetic material industry will show the characteristics of low before, medium stability, and slow recovery after stable. China's magnetic material industry will also usher in a wave of rebound in the second half of the year as downstream demand gradually recovers. Raw materials will rise to a certain extent.
On the other hand, the outbreak of the epidemic will speed up and promote the optimization, upgrading and adjustment of enterprises in the magnetic materials industry in my country. In the future, competition in the low-end and middle-end markets of the magnetic materials industry will become more intense and profit margins will further decline. The market is occupied by a small number of enterprises with scale advantages. The cultivation of new pillar industries and the construction of "new infrastructure", such as: vigorously develop knowledge and technology-intensive industries such as office automation, artificial intelligence, life and health, new energy and new materials, and adapt to 5G, intelligent networked vehicles, quantum communications, electronics Business, online medical, distance education and other industry development needs. At the same time, accelerate the construction of a new generation of information technology and digitalization as the core of new infrastructure, support the industrial and social network, digital, and intelligent upgrade development, will continue to promote China's magnetism The market development of materials in these areas.
China Electronic Materials Industry Association Magnetic Materials Branch
Wengxingyuan
February 13, 2020
