The end of 2011 brings rising servo motor prices

Dramatically rising prices of magnets from China are going to start cutting into the consumer's wallet by the start of 2012.

11/14/2011


To cope with the rise in magnet prices, motion controls suppliers are driving productivity to offset the increase, however in the second half of 2011 there has been evidence that for many suppliers these prices can no longer be absorbed and the cost must be passed onto the customer.  

The last half of 2011 and 2012 will be the major exceptions to this trend as the servo motors markets is being affected significantly by increasing magnet costs. Several suppliers increased servo motors prices in the second half of 2011 and those that have yet to increase prices are expected to do so in 2012 to offset the dramatically rising prices of magnets from China. Average selling prices for servo motors are predicted to increase by 6.6% in 2011 and 9.3% in 2012 as the majority of the market is expected to begin raising prices.

Servo motors require magnets manufactured from rare earth minerals, including both neodymium and dysprosium. Currently, neodymium-based permanent magnets (PMs) are estimated to cost about €70/kg ($95/kg). Neodymium is not found naturally in metallic form and must be extracted from monazite and bastnasite ore. China is currently the leading producer of neodymium magnets and is estimated to account for 97% of the world’s current supply. Although the raw material (ore) does exist in other countries around the world, China is currently the leader in processing this ore into the raw elements needed to manufacture these powerful magnets. However, mining for this ore also occurs in the USA, Brazil, India, Sri Lanka, Japan, and Australia, but due to environment laws mining in several of these countries drives up the cost of the final product above that of China’s.

In July 2010, China’s Ministry of Commerce announced plans to cut export quotas for rare earth minerals by over 70% in the second half of 2010. This decision caps foreign shipments at 8,000 metric tons, down from 28,500 metric tons in the same period in 2009. In August 2010, two of China’s largest state-owned rare earth mining companies announced intentions to create a unified pricing system that aims to give China greater control over the availability and supply of rare earth minerals, including neodymium. Prices for these magnets in China have continued to increase over 2011, ultimately creating a race for other countries to turn on mines and find quick alternatives to extracting neodymium.

Profile photo of Jenelea Howell, a research manager for IMS Research who specializes in motor controls and switchgear. Courtesy: IMS ResearchRecent interruptions in demand for neodymium magnets is coming from the hybrid electric vehicles market, wind turbines, and the squirrel-cage permanent magnet motor market, which is helping to drive up prices of these magnets. As motor efficiency legislation is driving the use of squirrel-cage permanent magnet motors, induction motor manufacturers also providing these motors are concerned that customers will not pay such a high cost for these motors. In this case, the customers have a choice to buy an induction motor since it is a substitute product, but for servo motors there is no substitute product to rely on, therefore, the customer must pay the higher prices. Although many countries are trying to find alternative ways of mining and extracting this material in order to speed up the process of supplying the market, the effects of current price increases can no longer be absorbed by suppliers. 



No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Leaders Under 40 program features outstanding young people who are making a difference in manufacturing. View the 2013 Leaders here.
The new control room: It's got all the bells and whistles - and alarms, too; Remote maintenance; Specifying VFDs
2014 forecast issue: To serve and to manufacture - Veterans will bring skill and discipline to the plant floor if we can find a way to get them there.
2013 Top Plant: Lincoln Electric Company, Cleveland, Ohio
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Bring focus to PLC programming: 5 things to avoid in putting your system together; Managing the DCS upgrade; PLM upgrade: a step-by-step approach
Balancing the bagging triangle; PID tuning improves process efficiency; Standardizing control room HMIs
Commissioning electrical systems in mission critical facilities; Anticipating the Smart Grid; Mitigating arc flash hazards in medium-voltage switchgear; Comparing generator sizing software

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.