SMM11, February 2: recently, a policy that shook the rare earth industry was released. On October 30, eight ministries and commissions, including the Ministry of Industry and Information Technology and the National Development and Reform Commission, issued a notice to once again join hands to further rectify the provinces and cities of the main rare earth producing areas. The renovation will cover eight provinces (autonomous regions), including Inner Mongolia, Jiangsu, Fujian, Jiangxi, Hunan, Guangdong, Guangxi and Sichuan, focusing on the arrangements and implementation of the rectification of the rare earth industry in the relevant areas since 2017. At the same time, spot check rare earth mines (including pressure covered rare earth resources recovery project), smelting separation, resource recovery and utilization and trade circulation enterprises. These include, inter alia:
Whether to organize production in strict accordance with the total quantity control plan;
Whether the smelting separation enterprise has the behavior of purchasing and processing illegal rare earth mineral products;
Whether the enterprise of comprehensive utilization of resources has the behavior of processing rare earth mineral products;
Whether the trade circulation enterprises have illegal and illegal acts such as buying and selling illegal rare earth products (including imports).
Boosted by this news, the rare earth plate has risen continuously, breaking the 60-day moving average from below all the EMA in just four days, up 0.7%. In terms of stocks, the whole line has been repaid for several days in a row.
Eight ministries and commissions jointly crack down on rare earths
In fact, this joint action by the eight ministries and commissions is not the first time to crack down on rare earths. As early as September 25, the General Office of the Ministry of Industry and Information Technology issued a notice on the establishment of a regular publicity system for rare earth mines and smelting and separation enterprises. The six major rare earth groups are required to complete the publicity of rare earth mines and smelting and separation enterprises in 2018 by October 15, and to carry out the subsequent years according to the requirements of publicity time. The publicity includes:
Rare earth mines: including the name of the mine under production, mining license (approval documents for construction projects containing recycled rare earths), location, and whether or not to issue an annual total mining control plan.
Smelting separation enterprises: including the name and location of the enterprise, whether to issue the annual smelting separation total control plan, production status.
Guangfa Securities believes that the rare earth regular publicity system will promote the overall pricing system of the industry, trade links or face reshuffle, pricing power will return to the hands of the six major groups that control resources, and the concentration of upstream and downstream of the industry will also be concentrated to the six major groups; The supply-side expansion caused by superimposed environmental verification is limited. The recent special inspection of rare earths is a re-examination of the special verification organized by various localities in the past two years at the level of state ministries.
Invisible supply will be suppressed.
"Black rare earths" are the main culprits that rare earths have been in oversupply for a long time. The rectification and supervision work is divided into eight inspection groups for a period of one month. We will focus on the implementation of the arrangements and implementation of the rectification work of local governments, the implementation of policies for rare earth enterprises, and the investigation and handling of reporting clues, and so on. According to SMM to understand the situation of a separate enterprise in Sichuan, this inspection is mainly on environmental protection, taxation, raw material sources, product sales, inventory and so on. At present, the production of enterprises in this area is basically normal. Rare earths are being cleaned up in part to help shrink the industry's invisible supply. Realize the pattern of production and circulation from black to white, and promote the reverse and transparency of the operation planning of rare earth industry.
Weak demand, insufficient buying, limited price increases.
This week, the market price of rare earths first suppressed and then rose. In the first half of the week, praseodymium and neodymium oxide fell to 31.3-315000 yuan per ton. On Tuesday, the Ministry of Industry and Information Technology announced that it would launch a month-long special supervision and inspection work on rectifying the order of the rare earth industry. The news played a certain role in boosting the market, and the price of praseodymium and neodymium oxide has rebounded to 31.5-317000 yuan per ton.
Looking ahead to next week, SMM believes that the rectification and inspection work will deter and suppress the supply of illegal raw materials, thus contributing to the supply of rare earths in the market. However, due to the recent weak downstream demand, the purchase price is not expected to rise by a limited extent.