When Will Rare Earth Prices Deplete Its Upside Momentum?

SHANGHAI, Feb 23 (SMM) - Recently, rare earth permanent magnet stocks continued to rise since the end of January, recording a gain of more than 11% from the closing prices on January 28. As of the time of this writing, intraday rare earth permanent magnet stocks have risen by more than 2%.

On the news front, the latest list prices of Southern Rare Earths were announced this week, and the prices of middle and heavy rare earths moved steadily up. In terms of sports, as of February 23, SMM spot average price of PrNd oxide was RMB 1,105,000/mt, up by as much as 20% in the past month. On January 28, the Ministry of Industry and Information Technology and the Ministry of Natural Resources issued the first batch of 2022 rare earth mining and smelting/separation quotas of 100,800 mt and 97,200 mt respectively. The light rare earth mining quota rose by 23.2% year-on-year, while the middle and heavy rare earth mining quotas stayed unchanged year-on-year.

On the demand side, the demand for rare earth permanent magnets continues to be strong. And in the context of global transition to low carbon and electrification, new energy vehicles, industrial motors, wind power, robots, etc. have created more demand for rare earth permanent magnets. According to the Motor Energy Efficiency Improvement Plan (2021-2023) jointly released by the Ministry of Industry and Information Technology and the General Administration of Market Regulation, by 2023, energy efficient motors will achieve annual electricity savings of 49 billion kWh, equivalent to annual savings of 15 million mt of standard coal and 28 million mt of carbon dioxide emissions.

As for the supply side, the rare earth supply from Myanmar was affected by the COVID pandemic, leading to a decline in global rare earth supply. In China, although the first batch of rare earth mining quotas was issued, it coincided with the rainy season, hence the supply of middle and heavy rare oxide in south China is unlikely to increase greatly in the first quarter. The rare earth market supply and demand gap is expected to widen amid rigid demand from the downstream.