How Are Major Market Players Viewing Future Rare Earth Outlook?

According to the China Non-Ferrous Metals Industry Association: Ge Honglin, Secretary of the Party Committee and President of the China Non-ferrous Metals Industry Association, recently put forward five opinions on the current problem of the development of China's rare earth industry, including consolidating the resilience of strategic resources to offer better service for National strategy, accelerating the improvement of innovation capabilities to forge new advantages in high-end development, increasing efforts in green, low-carbon and intensive transformation to enhance the new image of industry development, strengthening the “integration of informatization and industrialization" to enhance the level of intelligence in the industry, adhering to high-level opening up to the outside world to continuously expand new development.

According to the China Non-ferrous Metals Industry Association, Ao Hong, Secretary of the Party Committee and Chairman of China Rare Earth Group Co., Ltd., put forward five initiatives to promote the rare earth industry to better serve the national strategy and accelerate the high-quality development of the rare earth industry by building a new pattern of industry development, adhering to "two kinds of resources" and "two markets", strengthening security support, creating a good development ecology, consolidating the dominant position in the global industrial chain, focusing on China's technological innovation needs, creating a new highland for technological innovation, strengthening the extension and comprehensive application of resources and promoting the high-end industrial value develop.

[CITIC Securities: China's rare earth industry chain may be in a new era of high-quality development] A CITIC Securities research report pointed out that Premier Li Qiang chaired an executive meeting of the State Council on November 3 to study the work related to promoting the high-quality development of the rare earth industry and strive to promote modernization, intelligence and green development of the high-end rare earth industry. The Ministry of Industry and Information Technology issued the Guiding Opinions on the Innovation and Development of Humanoid Robots on November 2, clearly proposing to yield mass production of humanoid robots by 2025. Bolstered up by constant favourable policies and elevated prices, the operating performance of rare earth sector companies is expected to reach a turning point. Players will be advised to pay attention to the strategic allocation value of the rare earth industry chain.

[TF Securities: The State Council executive meeting clarified development direction of the rare earth industry, and the industry is expected to accelerate high-quality development] TF Securities research report believes that the high-quality development of the rare earth industry repeatedly mentioned aimed to create China's advantageous resource industry chain policy. The rare earth quota system was implemented. Integration of the six major rare earth groups changed into the reintegration of the four major rare earth groups. The next industrial direction was high-end, intelligent, and green. Rare earths are an important strategic resource in China. The country has always been regulating and promoting the development of the industry in such directions as maintaining its dominant position in the industry, promoting the steady development of the industry, and promoting high-end applications. Looking back on the history of industrial development in the past two decades, the rare earth industry-related policies shored up efforts to unswervingly make the rare earth industry high-end, larger and stronger. We believe that the core intention is to build China's advantageous resource industry chain around independent controllability. The gross profit margin of the rare earth industry chain may bottom out in stages, and opening up new applications will be the core growth point in the future. Industry profitability may bottom out on the near-term horizon. In the medium and long term: Demand and value of emerging industries represented by robots are expected to continue to rise. The industrialization of composite materials using rare earths as additive elements continues to make breakthroughs. Therefore, the industry's prosperity is expected to continue to increase in the medium and long term.

Zhongtai Securities said: The State Council executive meeting emphasized that rare earths are key strategic mineral resources to promote the development of the rare earth industry in a terminal, intelligent and green manner. Multiple consumption scenarios such as medium and long-term robots and new energy vehicles are expected to boom.

Sinolink Securities believed that rare earth prices stabilised, and performance improved. The second batch of rare earth indicators were released. With demand recovery, rare earth prices are expected to be volatile. The development of emerging fields such as downstream industrial motors and humanoid robots is expected to persistently boost NdFeB demand. Chinese rare earths and other targets will need to be monitored.

Ping An Securities pointed out that the rare earth prices will rebound amid tight supply-demand fundamentals. According to data from the Ministry of Industry and Information Technology, China's total rare earth mining and smelting quotas in 2023 were up 14.29% YoY and 13.86% YoY, but the growth rate was significantly lower than 25% each in 2022. Demand from terminal trams, wind turbines, etc., had some support for rare earth market, and supply-demand fundamentals of praseodymium-neodymium oxide appeared balanced-to-tight. Looking forward to the market outlook, underpinned by long-term demand from end-users, such as industrial robots, new energy vehicles, and wind turbines, the terminal penetration rate of high-performance NdFeB permanent magnets is expected to continue to increase. However, with slower supply growth, supply-demand fundamentals of rare earths will be tight, boosting prices.