SHANGHAI, Feb 23 (SMM)—Rare earth stocks surged 6.63% on February 22, posting a six-day winning streak, and the biggest increase during this period was as high as 22%. Seven stocks including Zinc Industry, China Baoan, China Minmetals Rare Earth, Northern Rare Earth, Jiangxi Copper, Zhangyuan Tungsten, and Huahong Technology rose by their daily limits, while other stocks also followed higher.
Last week, the Ministry of Industry and Information Technology (MIIT) and the Ministry of Natural Resources issued the first batch of total control targets for rare earth mining and smelting separation in 2021, which stand at 84,000 mt and 81,000 mt respectively.
This year's rare earth mining and smelting separation quota account for 60% of the 2020 ones, and according to the first batch of quotas in previous years, SMM predicts that the first batch in 2021 will account for 50% of the annual quotas. The significant rise in the quota is to cater to the growing downstream demand for rare earth, and to prevent vigorous price fluctuations, SMM believes.
The increase in rare earth mining quotas is in line with market expectations as the rapid development of new energy vehicles (NEV), wind power and other emerging industries has greatly increased the demand for rare earth, according to Huachuang Securities. The new rare earth supply shifts from overseas mines to domestic ones, which will help upstream companies increase market shares and reduce costs.
The State Council issued the Opinions on Supporting the Revitalization and Development of Old Revolutionary Areas in the New Era on February 20, promoting to construct the "China Rare Earth Valley" and to study the policy of storing medium and heavy rare earth and tungsten resources. It supports planning and construction of big data centers of rare earth and tourism sectors in areas where conditions permit, and encourages Internet companies to develop operations and call centers in old revolutionary areas. China's rare earth reserves are the largest in the world, and Jiangxi Ganzhou, a key rare earth producing area in south China, can produce 70% of the world's medium and heavy rare earth and 60% of black tungsten every year.
Soochow Securities analyst Yang Jian said that demand for rare earth mainly comes from permanent magnet materials, that is neodymium-iron-boron permanent magnets, and their downstream demand mainly comes from automobiles (50%), wind power (10%) and air conditioners (8.4%). Since the second half of 2020, growth rates of the automobiles, wind power and air conditioners sectors have maintained at relatively high levels due to favourable policies. China's demand for praseodymium and neodymium oxide is expected to reach 43,000 mt in 2025, with the composite growth rate from 2020 to 2025 at 14.5%.
SMM believes that improving demand for high-performance Nd-Fe-B permanent magnetic product is still the main driving force for prices of rare earth products. As each new energy vehicle consumes about 3 kilograms of Nd-Fe-B, the rapid development of the NEV industry will help boost demand for high-performance Nd-Fe-B permanent magnetic product.
The spot market of rare earth
Most of the rare earth plants did not reduce or suspend production during the Chinese New Year (CNY) holiday, and some large-scale magnetic products makers operated normally as they reported robust orders.
On the second day after the holiday, although companies have resumed work gradually, trades were quiet in the spot market. Prices of lanthanum and cerium oxide hovered at lows, as their supply exceeds demand. Many separation plants sought buyers to reduce inventories accumulated previously. Lanthanum and cerium oxide are mainly used in polishing powder and metallurgy industries. Prices of neodymium and praseodymium oxide extended gains, with mainstream offers for neodymium and praseodymium oxide at 480,000 yuan/mt. Prices of neodymium and praseodymium stood at around 590,000 yuan/mt. Prices of heavy rare earth increased slightly from pre-holiday levels, and are expected to rise further as magnetic products plants resume operations.
![Los precios de tierras raras se mantienen estables en general y el comercio en el mercado sigue débil [Informe diario de tierras raras de SMM]](https://imgqn.smm.cn/usercenter/UoswK20251217171743.jpeg)
