DMEGC Magnet Output Falls as Competition and Export Controls Pressure Sales

DMEGC

DMEGC magnet output fell in 2025 as tougher competition and China’s export restrictions on some rare earth permanent magnets weighed on sales. Hengdian Group DMEGC Magnetics produced 221,690t of magnetic materials during the year, down 2.5% from 2024.

DMEGC magnet output declined even as the broader Chinese magnet market benefited from stronger demand in new energy vehicles, smart appliances, data centres and consumer electronics. The company’s magnetic material sales fell by 5.9% to 218,282t, while inventories rose by 22% to 19,074t.

DMEGC magnet output weakness shows that rising end-market demand does not guarantee growth for every producer. Fiercer competition in China and overseas, combined with tighter controls on medium and heavy rare earth magnet exports, created pressure across the company’s magnet business.

China imposed export restrictions in April 2025 on permanent magnets containing seven medium and heavy rare earth elements. These included dysprosium, terbium, yttrium, lutetium, gadolinium, scandium and samarium.

The restrictions affected a sensitive part of the magnet supply chain. Dysprosium and terbium are especially important for high-performance magnets used in electric vehicles, wind turbines, robotics, aerospace systems and defence-related applications.

Magnetic Materials Lag as DMEGC Revenue Rises Elsewhere

DMEGC’s overall business still expanded in 2025 despite weaker magnet volumes. Revenue rose by 22% on the year to 22.6bn yuan, while profit increased by 1.3% to 1.85bn yuan.

The strongest revenue growth came from photovoltaic products. Sales from that segment rose by 29% to 14.3bn yuan, making solar products a major earnings driver for the group.

Revenue from magnetic materials increased by 5% to 4bn yuan, even though output and sales volumes declined. This suggests that pricing, product mix or higher-value material sales partly offset weaker physical shipments.

Lithium battery revenue also increased. Sales rose by 12% to 2.72bn yuan, while component sales climbed by 30% to 995mn yuan.

The result shows DMEGC’s advantage as a diversified materials and energy technology supplier. Weakness in one product line did not prevent group revenue growth, because photovoltaics, batteries and components supported the wider business.

Still, the magnet segment remains strategically important. DMEGC had designed magnetic materials capacity of 300,000 t/yr by the end of 2025, placing it among China’s leading magnetic material producers by sales scale.

The company’s battery and component capacity also reached 23GW and 21GW, respectively, while lithium battery output capacity stood at 8GWh. This gives DMEGC exposure to several electrification markets, including solar, batteries, motors and electronic components.

The inventory increase in magnetic materials deserves attention. Rising inventories during a year of falling sales can signal slower customer offtake, tougher competition or weaker export channels.

Export restrictions may have added to that pressure. When overseas buyers face licensing uncertainty, shipment delays or compliance risk, purchasing patterns can change even if underlying demand remains strong.

This is particularly important for rare earth permanent magnets. Buyers in automotive, robotics, wind power and electronics supply chains require stable delivery, traceability and qualification. Policy disruption can therefore affect procurement decisions quickly.

NEVs, Appliances and Data Centres Support Long-Term Magnet Demand

China’s magnet demand outlook remains positive despite DMEGC’s weaker 2025 volume performance. China produced 1.62mn t of magnetic materials in 2025, accounting for about 80% of global output.

This total included 750,000t of permanent magnetic ferrite, 600,000t of soft magnets and 270,000t of rare earth permanent magnets. The scale confirms China’s dominant role across both low-cost and high-performance magnet supply chains.

New energy vehicles remain one of the strongest demand drivers. China’s automobile output rose by 10% to 34.5mn units in 2025, while NEV production increased by 29% to 16.6mn units.

NEVs consume more magnetic materials because electric drivetrains, sensors, power steering, braking systems, pumps and comfort systems all require motors and magnetic components. As vehicles become more automated, intelligent and comfort-oriented, magnet intensity per vehicle is likely to increase.

Smart home appliances are another major demand source. China’s output of air conditioners, refrigerators and washing machines reached 266.97mn, 109.24mn and 125.17mn units, respectively, in 2025.

These appliances support demand for soft magnets and ferrite materials used in motors, compressors, power electronics and control systems. Energy efficiency standards and inverter technologies can further raise the need for higher-performance magnetic components.

Data centres are becoming a newer growth channel. Global server shipments rose by 1.9% to 16.3mn units in 2025, while AI server shipments increased by 25% to 2.04mn units.

Cooling systems in data centres require fans, motors and magnetic components. As AI infrastructure expands, heat management becomes more important, adding another source of demand for rare earth permanent magnets and soft magnetic materials.

Consumer electronics also supported the market. Global smartphone shipments rose by 2% to 1.25bn units, while personal computer shipments increased by 9.2% to 280mn units.

This broad demand base gives Chinese magnet producers a strong long-term market. However, it also attracts capacity expansion and intensifies competition. Producers must now compete not only on volume, but also on product quality, export compliance, heavy rare earth efficiency and downstream qualification.

The market is therefore entering a more selective phase. Producers with strong customer relationships, stable rare earth supply, advanced magnet technologies and diversified end-market exposure will be better positioned.

DMEGC’s 2025 results reflect that transition. Demand for magnets is rising, but policy controls, competition and inventory pressure can still weaken individual company performance.

The Metalnomist Commentary

DMEGC’s results show that China’s magnet market is growing, but not evenly. The next competitive divide will come from export-control management, high-performance magnet capability and access to reliable rare earth feedstock.