Events
On January 28, the Ministry of industry and information technology and the Ministry of natural resources issued the notice on Issuing the total control indicators of the first batch of rare earth mining and smelting separation in 2022. The total control indicators of the first batch of rare earth mining and smelting separation in 2022 were 100800 tons and 97200 tons respectively. Among them, the indicators of light rare earth mining, medium heavy rare earth mining and smelting separation of China rare earth group are 29100 tons, 7806 tons and 34680 tons respectively, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) light rare earth mining and smelting separation indicators are 60210 tons and 53780 tons respectively, Xiamen Tungsten Co.Ltd(600549) medium heavy rare earth mining and smelting separation indicators are 2064 tons and 2378 tons respectively, and the indicators of medium heavy rare earth mining and smelting separation of Guangdong rare earth industry group are 2064 tons and 2378 tons respectively The smelting separation indexes are 1620 tons and 6362 tons respectively.
Commentary
Medium and heavy rare earths were flat year-on-year; The light rare earth index increased by 20% year-on-year, with China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) accounting for the largest proportion.
The first batch of rare earth mining, smelting and separation indicators in 2022 increased by 20% year-on-year compared with 2021, including 89310 tons of light rare earth mining indicators, an increase of 23.2% year-on-year, 11490 tons of medium and heavy rare earth mining indicators, which were flat year-on-year, and the overall growth rate of indicators was in line with expectations.
In terms of light rare earth mining, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) mining index increased by 36.4% year-on-year, accounting for 67.4% of the total index. In terms of medium and heavy rare earth mining, after the integration, the mining indicators of China rare earth group accounted for 67.9% of the total indicators, with a year-on-year increase of about 2.5% according to the total of the first three Minmetals, Nanfang and rare rare earth; The Xiamen Tungsten Co.Ltd(600549) mining indicators of Guangdong rare earth group were flat year-on-year. In terms of smelting separation, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) index was 53780 tons, with a year-on-year increase of 40.5%, and the quota accounted for 55.3%; The target of China rare earth group is 34680 tons, accounting for 35.7% of the quota.
It is expected that the annual mining index will increase by 20% year-on-year, and the tight balance between supply and demand will help maintain the high price of rare earth.
According to the calculation that the first batch of indicators accounted for half of the whole year in 21 years, the overall rare earth mining index in China is expected to be more than 200000 tons in 22 years, with a year-on-year increase of about 20%, which is in line with the market’s expectation of an annual increase of 20% in supply.
We estimate that the global supply shortage of praseodymium and neodymium oxide is expected to be 12000 tons and 19000 tons respectively in 22-23 years. The rapid development of global new energy vehicles, wind power and other fields has driven the demand for NdFeB permanent magnet to increase. It is expected that the demand for praseodymium and neodymium oxide will maintain a growth rate of more than 20% in 22-23 years. China’s supply is controlled by indicators, while the construction cycle of overseas new projects is long, and it is difficult to increase in the short term of 2-3 years. Therefore, the industry is expected to maintain a tight balance in 22 years.
Driven by supply and demand, prices remained high. Over the past 21 years, the price of rare earth has risen steadily, with the price of praseodymium oxide rising by 165% and the price of neodymium oxide rising by 107%; Dysprosium oxide prices rose 57%, terbium oxide prices rose 87%. By the end of January 22, the average prices of praseodymium oxide and neodymium oxide had reached 923200 yuan / ton and 1012900 yuan / ton respectively, continuing to remain high. Stimulated by the release of the first mining indicators during the year, it is expected that the subsequent prices are easy to rise but difficult to fall.
Investment advice
In recent years, rare earth has benefited from the continuous growth of the demand for permanent magnet materials in the fields of new energy vehicles, wind power and variable frequency air conditioning. The superposition supply side is limited by the capacity index, the supply and demand structure is expected to be continuously optimized, and the industry leaders are expected to fully benefit. It is suggested to pay attention to the relevant targets at the upstream of rare earth resources, which are China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , China Minmetals Rare Earth Co.Ltd(000831) , Inner Mongolia Baotou Steel Union Co.Ltd(600010) and so on; At the same time, it is suggested to pay attention to the magnetic material stocks Ningbo Yunsheng Co.Ltd(600366) , Jl Mag Rare-Earth Co.Ltd(300748) , Beijing Zhong Ke San Huan High-Tech Co.Ltd(000970) , Earth-Panda Advanced Magnetic Material Co.Ltd(688077) benefiting from the industrial chain.
Risk tips
Downstream demand is lower than expected; China’s supply release exceeded expectations.
