Event: 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.
The supply of medium and heavy rare earths has not increased, and the index is more inclined to light rare earths represented by China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) . The first batch of rare earth mining, smelting and separation indicators in 2022 will increase by 20% compared with the first batch in 2021. In terms of splitting, the mining indicators of medium and heavy rare earths have not changed compared with the same period last year, accounting for 11.40% of all mining indicators; The light rare earth mining index has increased, about 23.17%, accounting for 88.60% of all rare earth mining indexes. The light rare earth mining index of China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) increased by 36.4% year-on-year, which contributed to the growth of light rare earth index; The newly established China rare earth group, composed of China Minmetals Rare Earth Co.Ltd(000831) , China rare earth and South China rare earth, has a light rare earth mining index of 29100 tons, an increase of 2.54% compared with the total of the first batch of light rare earth mining indexes in 2021 before the merger of the three companies, which remains basically unchanged.
The supply concentration of medium and heavy rare earths in the first batch of indicators this year has increased significantly. From the perspective of the index distribution proportion of medium heavy rare earths and light rare earths, the newly established China rare earth group accounts for 68%, Guangdong rare earth industry group accounts for 14%, and Xiamen Tungsten Co.Ltd(600549) accounts for 18%; Among the light rare earth indicators, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) accounts for 67%, and China rare earth group accounts for 33%.
The demand for rare earth in new energy related industries is growing rapidly, and the contradiction between supply and demand supports the strong price shock of major rare earth varieties. On the supply side, the first batch of rare earth mining and smelting separation indicators accounted for half of the annual indicators in 2021. Assuming that the quota promulgation logic of the Ministry of industry and information technology and the Ministry of natural resources in 2022 is similar to that in 2021, it is expected that the annual rare earth mining and smelting separation indicators will increase by 20% to about 202000 tons. On the demand side, after the Spring Festival, there is strong demand in terminal areas such as wind turbines and new energy vehicles, and orders increase. Large magnetic material enterprises are full of orders. Although the first batch of rare earth mining indicators were issued, it coincides with the rainy season, and the mining of medium and heavy rare earth mines in the south is difficult. It is expected that the supply of medium and heavy rare earth oxides in China will not increase in the first quarter. The widening gap between supply and demand makes magnetic material enterprises have strong bullish sentiment on the price of rare earth raw materials. Some magnetic material enterprises lock prices with upstream enterprises. The contradiction in the rare earth market has changed from the contradiction of low acceptance of prices in the downstream to the contradiction of supply and demand in short supply of rare earth. By January 2022, the average price of praseodymium and neodymium oxide was 915300 / ton, an increase of 7.7% month on month; The average price of praseodymium and neodymium was 1124500 / ton, an increase of 8.1% month on month. It is expected that the prices of major rare earth varieties such as praseodymium and neodymium oxide will fluctuate strongly in the first quarter.
Investment suggestion: the rare earth sector is expected to continue to strengthen. It is suggested to focus on industry leading companies. Under the current normal situation of resource shortage, the stock demand of magnetic material enterprises may increase and the price of rare earth will rise. The profits of companies related to the industrial chain are expected to grow continuously for a long time, and the rare earth sector is expected to continue to strengthen. It is suggested to focus on industry leading companies.
Risk tip: the intensification of the overseas epidemic affects the downstream demand, and the rare earth supply side is released more than expected
