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Original title: Downstream demand exceeds expectations and repairs, rare earth prices may open a long bull, institutions are optimistic about the continuity of price increases Source: The Financial Association
Today, the rare earth permanent magnets sector rose abnormally. The leading heavy rare earth stocks rose and the resources rose. The industry leaders Northern Rare Earth and Minmetals Rare Earth all rose by more than 4%. According to the news, the price of rare earth permanent magnets has been raised collectively today. Among them, neodymium praseodymium oxide rose by 5000 yuan/ton to 417,500 yuan/ton; terbium oxide rose by 100,000 yuan/ton to 7.525 million yuan/ton.
Industry insiders believe that as the global epidemic situation continues to improve, downstream demand may continue to pick up, upstream supply contraction remains unchanged, and rare earth prices are expected to continue to rise. Industrial Securities said that by 2025, the demand for neodymium iron boron magnets for new energy vehicles will rapidly increase to 31,500 tons, with a compound annual growth rate of 33.7%. Supply and demand, policy two-wheel drive, rare earth prices may open a long bull.
Downstream demand exceeds expectations and repairs rare earth prices are expected to be supported
From the perspective of technical trends, this round of rise in the rare earth permanent magnet sector started on November 2 last year, and the mainline sector started in "pro-cyclical" synchronization in November. At that time, although the increase in the rare earth permanent magnets sector was also considerable, its brilliance was concealed in the concept of basic metals represented by "copper and aluminum" and various chemical products. Since then, with the switchover of the main market lines in December, new energy vehicles, photovoltaics, and military industries have become the new main lines of the market.
The non-ferrous metal sector has also undergone a greater differentiation. As the upstream of new energy vehicles, cobalt, lithium, copper, and nickel have become the new leading branch. Rare earth permanent magnets with the same driving logic have gradually begun to walk out of their own independent market. According to the statistics of the Financial Associated Press, after seeing a staged low on December 17, the rare-earth permanent magnet sector saw the largest increase during the period of 15.9%, and the stock price also hit a new high in nearly three years.
Daily chart of rare earth permanent magnet plate
Regarding the continuous increase in rare earth prices, the market believes that the recovery in downstream demand is the main reason. As the two most important downstream application areas of rare earths, the boom in new energy vehicles and consumer electronics industries has also boosted the price of rare earths. Business agency data show that in 2020, the domestic rare earth market price trend will increase to varying degrees. The domestic light rare earth market prices have risen sharply, while the heavy rare earth market has been at a high level. Among them, the price of terbium has risen to a 10-year high.
From the perspective of demand, the current growth rate of traditional magnetic materials is relatively stable, and high-performance NdFeB magnetic materials are mainly used in new energy vehicles, wind power, variable frequency home appliances, consumer electronics and other fields. The great development of the new energy industry is the background of the rapid development of the NdFeB market. With the rapid growth of new energy vehicle production and sales and the continuous development of wind power generation, the consumption of rare earth permanent magnet materials is expected to continue to grow at a high level.
From the perspective of supply, my country’s reserves of rare earth resources are 44 million tons, accounting for about 37% of the world’s total. About 90% of the world’s rare earth product supply comes from China every year. In recent years, the United States, the European Union, Japan and other economies have successively introduced policies to include rare earths in their national strategic resource reserves. my country’s Export Control Law of the People’s Republic of China concerning resource exports has also been formally implemented on December 1st last year. Rare earth supply is expected to continue to shrink, and strategic positioning will continue to improve.
Specific to the A-share market, the increase in rare earth prices is conducive to improving the performance of related companies, among which companies with rare earth resources will fully benefit from product price increases. Rare earths are further divided into two categories: light rare earths and medium-heavy rare earths. Both light rare earths and heavy rare earths have been raised this time. Among them, the price of neodymium in the light rare earth market has increased significantly. In terms of listed companies, light rare earth listed companies mainly involve Northern Rare Earths, Shenghe Resources, etc. The listed heavy rare earth companies mainly involve Guangsheng Nonferrous Metals and Minmetals Rare Earth.
Rare earth prices are in the third stage of rising
From the perspective of the domestic rare earth market price trend in the past year, it can be roughly divided into three stages. The first stage is from the beginning of the year to the end of August. The domestic rare earth market price trend is in a volatile and rising stage; the second stage is from September to the end of October. The price of the domestic rare earth market has risen and fallen; the third stage is the stage where the price of the domestic rare earth market has soared since the beginning of November.
In the first stage, the domestic rare earth market prices fluctuated and increased. During this period, due to the impact of domestic and international public health events, the supply of rare earths was reduced, and the imbalance between supply and demand caused the domestic rare earth market prices to rise.
The second stage is from September to the end of October, when the domestic rare earth market prices have risen and fallen. This is mainly because the purchase in the industry has come to an end, the downstream inquiries have declined, and the major light rare earth manufacturers have sold off, causing market sentiment to change and trading conditions Decline, which led to a fall in market prices.
At present, it is in the third stage, the domestic rare earth market prices are soaring. Industry insiders believe that the output of domestic new energy vehicles has increased significantly, coupled with the rapid development of wind power, electronic products and other terminal industries. As the epidemic slows down, downstream manufacturers' capacity utilization rate continues, and demand may continue to pick up. At the same time, the domestic supply side is still in a contraction trend, and the supply and demand side is seriously unbalanced, causing the domestic neodymium market price to rise wildly.
The research report of CITIC Securities pointed out that the global demand for neodymium iron boron from 2020 to 2022 will be 25.0, 26.7, and 280 thousand tons respectively, corresponding to the demand for praseodymium and neodymium oxide of 7.63, 812, 85,400 tons, with an average annual compound growth rate of about 5%. The global supply of praseodymium oxide and neodymium oxide is 7.40, 7.76, and 79,200 tons (REO), or there will be a trend in short supply, reaching the order of 6000 tons in 2022, with a gap of about 10%. Neodymium praseodymium oxide has entered a shortage cycle, and the price of neodymium praseodymium oxide may continue to rise, and the industry's prosperity will continue to improve. As the "shadow" of rare earths, NdFeB magnetic materials adopt a cost-plus pricing model, which will also benefit from rising rare earth prices. In terms of target, it is recommended to pay attention to the core stocks of the industry chain: Zhenghai Magnetic Materials, Northern Rare Earth, Shenghe Resources, etc.
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The research report of CITIC Securities pointed out that the, global demand for neodymium iron boron from 2020 to 2022 will be 25.0, 26.7, and 280 thousand tons respectively,corresponding to the demand for praseodymium and neodymium oxide of 7.63, 812, 85,400 tons, with an average annual compound growth rate of about 5%. The global supply of praseodymium oxide and neodymium oxide is 7.40, 7.76, and 79,200 tons (REO), or there will be a trend in short supply, reaching the order of 6000 tons in 2022, with a gap of about 10%. Neodymium praseodymium oxide has entered a shortage cycle, and the price of neodymium praseodymium oxide may continue to rise, and the industry's prosperity will continue to improve. As the "shadow" of rare earths, NdFeB magnetic materials adopt a cost-plus pricing model, which will also benefit from rising rare earth prices. In terms of target, it is recommended to pay attention to the core stocks of the industry chain: Zhenghai Magnetic Materials, Northern Rare Earth, Shenghe Resources, etc.
IXR Price at posting:
2.7¢ Sentiment: Buy Disclosure: Held
(20min delay)