Key investment points
Event: on January 28, the Ministry of industry and information technology issued the first batch of total control indicators of rare earth mining and smelting separation in 2022, in which the total control indicators of rare earth mining and smelting separation were 100800 tons and 97200 tons respectively, with a year-on-year increase of 20%, the growth rate was the same as that of the same period of the previous year, which was in line with expectations.
The increment of rare earth mining mainly comes from light rare earth: in 2022, the total mining volume of the first batch of rock ore type rare earth (light rare earth) was 89310 tons, with a year-on-year increase of 23.17%, accounting for 88.60% of the total mining quota. The total mining amount of ionic rare earth (mainly medium and heavy rare earth) is 11490 tons, which is the same as that in 2021, accounting for 11.40%.
China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) accounts for 59.73% of the mining quota: from the perspective of branches, the total mining quota of China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) rock ore rare earth is 60210 tons, with a year-on-year increase of 36.44%, and the proportion in the total mining quota has increased from 52.54% in 2021 to 59.73%; The total quota for mining rock and mineral rare earths of China rare earth group, composed of China Minmetals Rare Earth Co.Ltd(000831) , China rare earth and the reorganization of China Southern rare earth group, was 29100 tons, with a year-on-year increase of 2.54%, accounting for 28.87%, and the mining indicators of other groups were basically the same.
The rare earth industry is in a new growth cycle, and the price is expected to continue the rising trend of the beginning of the year: the rare earth industry has undergone fundamental changes in supply and demand. The orderly and highly centralized supply pattern in China and the stabilization of global supply have reduced the supply elasticity. It is expected that the annual rare earth mining and smelting index in 2022 will be about 202000 tons, with a year-on-year increase of about 20%. In terms of demand, under the background of global low-carbon and electrification, new energy vehicles, improved energy efficiency of industrial motors, wind power, Siasun Robot&Automation Co.Ltd(300024) have replaced consumer electronics as the main driving force of rare earth permanent magnet demand, resulting in a leap in magnitude. We expect the average annual compound growth rate to be about 26% from 2022 to 25. The price of praseodymium neodymium oxide and praseodymium neodymium metal continued to rise in the beginning of 2022. The average price of praseodymium neodymium oxide in January was 915300 / ton, with a year-on-year increase of 108.13% and a month on month increase of 7.7%; The average price of praseodymium and neodymium was 1124500 / ton, with a year-on-year increase of 105.76% and a month on month increase of 8.1%. It is expected that the annual price is expected to continue the upward trend at the beginning of the year.
Investment suggestion: restricted by resource conditions, the increase of rare earth supply mainly comes from light rare earth, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) (600111) will continue to fully benefit from the simultaneous rise of volume and price of the industry. Under the background of accelerated expansion of demand for rare earth magnetic materials, the leaders of high-performance magnetic materials enterprises enhance their bargaining power to the downstream with high technical barriers, which can smoothly transmit the cost pressure. It is suggested to pay attention to Jl Mag Rare-Earth Co.Ltd(300748) (300748) and Yantai Zhenghai Magnetic Material Co.Ltd(300224) (300224).
Risk tip: the growth rate of rare earth downstream industry is lower than expected, and the quota policy changes.
