Amid the rare earth price surge, Jinli Permanent Magnet leads the global market with advantages in technology, supply chain, and customers

Recently, the rare earth industry chain has experienced a significant price increase. The upstream raw material prices for praseodymium-neodymium oxides have continued to rise, reaching an average of 845,500 yuan per ton at a certain statistical point, nearly a 40% increase from the end of the previous period. This surge has sparked widespread market attention on the profitability of midstream magnetic material companies. However, not all companies can achieve profit growth amid rising raw material costs; some face squeezed profit margins due to blocked cost transmission.

The rare earth permanent magnet industry is unique, with raw material costs typically accounting for 70% to 80% of total product costs. When upstream raw material prices soar, production costs for magnetic material companies rise accordingly. If they cannot effectively pass these costs downstream, their profits will be severely compressed. In this context, establishing a sound cost transmission mechanism becomes a key factor in determining a company’s profitability.

Jinli Permanent Magnet, as an industry leader, has stood out during the price increase wave through its unique business strategies. The company adopts a “cost-plus” pricing model and includes price adjustment clauses in contracts to ensure product prices can be adjusted in tandem with raw material price fluctuations. This mechanism allows it to smoothly pass cost pressures to downstream customers when raw material prices rise, maintaining profit levels.

Cost reduction through technological innovation is one of Jinli Permanent Magnet’s core strategies to cope with cost pressures. The company has continuously increased R&D investment, with nearly 1.6 billion yuan invested from 2020 to the first three quarters of a certain statistical period. R&D expenses rose from 4.17% to 5.88%. As of a certain date, the company held 136 authorized and pending patents worldwide, covering key technologies such as grain boundary penetration, formulation optimization, and grain refinement. Among these, grain boundary penetration technology reduces the use of heavy and medium rare earths, lowering production costs while maintaining high product performance, becoming a critical support for cost reduction and efficiency improvement. Data shows that during the statistical period, over 90% of the company’s products were produced using this technology.

Supply chain management is another advantage for Jinli Permanent Magnet. The company has established long-term strategic partnerships with major suppliers like Northern Rare Earth Group and China Rare Earth Group. In the first half of a certain period, procurement from these two companies accounted for 70% of total purchases. Through deep cooperation, the company ensures stable raw material supply and has built a sufficient inventory system. As of a certain date, raw material inventories more than doubled compared to the end of the previous period. The company has production bases in Ganzhou (Jiangxi), Baotou (Inner Mongolia), and Ningbo (Zhejiang), located near raw material sources and downstream markets, providing dual guarantees for capacity and delivery. During the period, capacity utilization exceeded 90%, with record high sales and production of high-performance magnetic materials, maintaining its position as the global industry leader.

In the field of rare earth recycling, Jinli Permanent Magnet has invested in Yinhai New Materials, forming a circular utilization system to further reduce raw material costs. The company holds a 51% stake in Yinhai New Materials, leveraging its technological advantages in recycling to meet customer demand for recycled rare earth raw materials, creating a resource closed-loop.

The downstream customer structure is a crucial safeguard for Jinli Permanent Magnet’s cost transmission capability. The company implements a “big customer strategy,” deeply integrating into the supply chains of top global enterprises. In the new energy vehicle sector, it supplies drive motor magnets for Tesla, BYD, and others; in energy-saving home appliances, it collaborates with brands like Mitsubishi, Midea, and Gree. In the first half of a certain period, revenue from the new energy vehicle sector accounted for over 50%, with product sales increasing by nearly 30% year-on-year. This stable customer base and large-scale orders give the company greater bargaining power, enabling it to effectively pass cost pressures to end markets.

Through coordinated efforts in technology, supply chain, and customer relationships, Jinli Permanent Magnet has built a unique competitive advantage amid volatile rare earth prices. Its business model not only achieves effective cost pressure transmission but also promotes resource integration across the industry chain, serving as a reference for the industry’s response to raw material price fluctuations.