The downstream demand exceeds expectations and repairs the price of rare earths or opens the long bull organization to be optimistic about the sustainability of the price increase.

Today, the intraday movement of rare earth permanent magnet plate rose, heavy rare earth leading stock Sheng and resources two waves pull board, industry leader northern rare earth, Minmetals rare earth all rose more than 4%. On the news side, the price of rare earth permanent magnets rose collectively today, with praseodymium and neodymium oxide rising 5000 yuan / ton to 417500 yuan / ton and terbium oxide up 100000 yuan / ton to 7.525 million yuan / ton.

Industry analysts believe that as the global epidemic situation continues to improve, downstream demand may continue to pick up, upstream supply contraction will remain unchanged, rare earth prices are expected to continue to rise. According to Societe Generale Securities, the demand for NdFeB magnetic materials for new energy vehicles is expected to grow rapidly to 31500 tons by 2025, with a compound annual growth rate of 33.7%. Supply and demand, policy two-wheel drive, rare earth price or open long bull.

The price of rare earths for more than expected repair in downstream demand is expected to be supported.

From the technical point of view, the rare earth permanent magnet plate this round of rise began on November 2 last year, Synchronize in November's main plate "pro-cyclical" start. At that time, although the increase in the rare earth permanent magnet plate was also considerable, its light was concealed in the concept of rising prices of basic metals represented by "copper and aluminum" and all kinds of chemical products. Since then, with the switching of the main line of the market in December, new energy vehicles, photovoltaic and military industry have become the new main line of the market.

Great differentiation has also taken place within the non-ferrous metal plate, as the upstream of new energy vehicles, cobalt, lithium, copper and nickel rods have become a new leading branch. Rare earth permanent magnets with the same driving logic also gradually began to come out of their own independent market. The rare earth permanent magnet sector rose 15.9% during the period since it hit a phased low on December 17, and share prices hit a new high in nearly three years, according to the financial news agency.

Daily trend chart of rare earth permanent magnet plate

For the continued rise in rare earth prices, the market believes that the recovery of downstream demand is the main reason. The boom in the new energy vehicle and consumer electronics industries, the two most important application areas downstream of rare earths, has also contributed to the rise in rare earth prices.

In terms of demand, the growth rate of traditional magnetic materials is relatively stable, and high-performance NdFeB magnetic materials are mainly used in new energy vehicles, wind power, frequency conversion household appliances, consumer electronics and other fields. The great development of new energy industry is the background of the rapid development of NdFeB market. With the rapid growth of production and marketing of new energy vehicles and the sustainable development of wind power generation, the consumption of rare earth permanent magnet materials is expected to continue to grow.

On the supply side, China has 44 million tons of rare earth resources, accounting for about 37% of the world's total, and about 90% of the world's rare earth products are supplied by China every year. In recent years, the United States, the European Union, Japan and many other economies have issued policies to include rare earths in their national strategic resource reserves. China's Export Control Law of the people's Republic of China, which involves the export of resources, has also been formally implemented on December 1 last year, so the global supply of rare earths is expected to continue to tighten and strategic positioning will continue to improve.

Specific to the A-share market, the rise in rare earth prices will help to improve the performance of related enterprises, in which enterprises with rare earth resources will fully benefit from higher product prices. Rare earths are divided into light rare earths and medium and heavy rare earths. The price increases include both light rare earths and heavy rare earths, among which the price of neodymium series in the light rare earth market has risen sharply. In terms of listed companies, light rare earth listed companies are mainly related to northern rare earths, Shenghe resources and so on. Heavy rare earth listed companies are mainly involved in Guangsheng non-ferrous metals, Minmetals rare earths and so on.

The price of rare earths is in the third stage of rise.

Judging from the price trend of the domestic rare earth market in the past year, it can be roughly divided into three stages: the first stage is from the beginning of the year to late August, and the domestic rare earth market price trend is fluctuating and rising; the second stage is from September to the end of October. The domestic rare earth market price has risen sharply since the beginning of November.

In the first stage, the price of the domestic rare earth market fluctuated higher, during this period, affected by domestic and international public health events, the supply of rare earths was reduced, and the imbalance between supply and demand led to a rise in the price of rare earths in the domestic market.

The second stage is from September to the end of October, when prices in the domestic rare earth market rose and fell, which was mainly due to the end of procurement in the industry, the decline in downstream enquiries, and the selling behavior of major light rare earth manufacturers, resulting in a shift in market sentiment and a decline in trading, resulting in a drop in prices on the floor.

At present, it is in the third stage, the price of rare earths in the domestic market is skyrocketing. Industry insiders believe that the domestic production of new energy vehicles has increased significantly, coupled with the rapid development of wind power, electronics and other terminal industries, as the epidemic slows down, the capacity utilization of downstream manufacturers continues, and demand may continue to pick up. At the same time, the domestic supply side is still in a shrinking trend, and there is a serious imbalance between supply and demand, resulting in a crazy price rise in the domestic neodymium market.

Citic Securities Research News pointed out that from 2020 to 2022, the global demand for NdFeB was 25.0,26.7 and 280000 tons respectively, and the corresponding demand for praseodymium and neodymium oxide was 7.63,8.12 and 85400 tons, with an average annual compound growth rate of about 5 per cent. On the other hand, the global supply of praseodymium and neodymium oxide is 7.40,7.76 and 79200 tons respectively, which may be in short supply, reaching 6000 tons in 2022, with a shortfall of about 10 percent. Praseodymium neodymium oxide into the shortage cycle, praseodymium neodymium oxide prices may continue to rise, the prosperity of the industry will also continue to improve. And NdFeB magnets as the "shadow" of rare earths, using the cost-plus pricing model, will also benefit from the upward price of rare earths. In terms of targets, it is recommended to pay attention to the core stocks of the industrial chain: Zhenghai magnetic materials, northern rare earths, Shenghe resources and so on.