Strong downstream demand expectation + continuous strict control at the supply side + national policy support = sound development of the whole rare earth industry chain.
Market review: Rare Earth concept sector and rare earth permanent magnet sector fell monthly. On March 31, the wind rare earth index closed at 189136, with a weekly increase of – 3.86% and a monthly increase of – 16.48%; Wind rare earth permanent magnet index closed at 482613, up – 2.43% in the week and – 12.65% in the month. The CSI 300 closed at 4222.6, up – 0.68% in the week and – 8.6% in the month.
Price: heavy rare earth and light rare earth prices fell. According to the data of China Rare Earth Industry Association, from March 16 to March 31, among the main heavy rare earth products, the lowest trading price of dysprosium oxide was 2.69 million yuan / ton, with a two-week rise and fall of – 7.24%; Among light rare earth oxides, the lowest trading price of praseodymium and neodymium oxide was 945000 yuan / ton, with a two-week rise and fall of – 6.34%; The lowest trading price of praseodymium oxide was 959000 yuan / ton, with a two-week rise and fall of – 7.79%; The lowest trading price of neodymium oxide was 1011000 yuan / ton, with a two-week rise and fall of – 9.16%.
Supply and demand: the sales volume and inventory of praseodymium and neodymium oxide manufacturers decreased month on month in February. According to the data of Asia metal network data center, the sales volume of praseodymium and neodymium oxide in China in February was 311000 metric tons, 278700 metric tons in the same period last year and 318300 metric tons last month, with a year-on-year increase of 11.59% and a month on month decrease of 2.29%; The stock of manufacturer’s warehouse was 559500 metric tons, 598000 metric tons in the same period last year and 570000 metric tons in the previous month, with a year-on-year decrease of 6.44% and a month on month decrease of 1.84%. According to provinces, the sales volume of praseodymium and neodymium oxide manufacturers in Inner Mongolia increased by 0.50% month on month; The sales volume of Sichuan praseodymium and neodymium oxide manufacturers increased by 26.90% month on month to 580 metric tons; The sales volume of Jiangxi manufacturers decreased by 41.73% month on month to 296 metric tons.
Import and export: the import volume of rare earth minerals increased in February, and the price of overseas rare earth minerals fluctuated significantly. According to the data of the General Administration of customs, the import volume of mixed rare earth carbonate in February 2022 was 194.18 tons, a year-on-year decrease of 61.66%, the average unit price was 35000 yuan / ton, and the price increased by 10.11% year-on-year; The import volume of rare earth metal ore was 975000 tons, a year-on-year increase of 147.37%, the average unit price was 44100 yuan / ton, and the price increased by 136.17% year-on-year; The import volume of thorium ore and its concentrate was 286838 tons, a year-on-year increase of 362.64%, the average unit price was 41800 yuan / ton, and the price increased by 111.41% year-on-year; In February, the total import of rare earth ore was 1281256 tons, a year-on-year increase of 152.81%, and the average price was 43400 yuan / ton, a month-on-month increase of 115.98%.
Investment logic: continue to firmly recommend the strategic allocation value of the whole rare earth industry chain. Under the guidance of recent policies, rare earth prices have been corrected, the fundamentals are still strong, and rare earth prices are expected to stabilize. Supply side: in the first half of the year, rare earth production indicators were put on demand, and China’s supply generally met expectations. At present, the epidemic situation in Myanmar is severe, and the supply disturbance of rare earth imported ore may continue; Demand side: driven by the high-speed demand of new energy vehicles, industrial motors and wind power, the magnetic material factory has full orders; According to the announcement, the world’s output of rare earth and high boron will be mainly 0.28 million tons from China in 2025, and the world’s output of rare earth and high boron is expected to reach 0.28 million tons from Sullivan respectively; With the rapid growth of downstream demand for new energy vehicles, industrial motors and wind power generation, the price of rare earth may make steady progress, the industrial structure is expected to be continuously optimized, and the concentration of rare earth permanent magnet industry may be further improved. Re emphasize the core logic of this round of long bull in the whole rare earth industry chain: 1) reasonable and abundant liquidity; 2) Driven by downstream demand such as new energy and industrial motors; 3) Price rise Pro cyclical allocation strategy; 4) National policy support. 2021 is the profit inflection point of the whole rare earth industry chain. In 2022, the price of rare earth is expected to continue to be strongly supported by the fundamentals of supply and demand. The price center of rare earth may continue to rise, and the profit of the industry chain may continue to exceed expectations under the simultaneous rise of volume and price. At the current time, we continue to firmly recommend the strategic allocation value of the whole rare earth industry chain, focusing on the rare earth permanent magnet sector.
Risk factors: the impact of local epidemic continues to expand; Macroeconomic fluctuations; The implementation of various policies such as crackdown on Mafia, environmental protection and collection and storage is less than expected; Downstream consumer demand was lower than expected.
Investment suggestion: maintain the rating of “stronger than the market” in the industry. The rare earth and rare earth permanent magnet industry has entered a new era of high-quality development. The rare earth and rare earth permanent magnet industry has entered a new era of high-quality development. The rare earth industry continues to recommend opportunities for strategic configuration opportunities in the full industry chain of rare earths, with key recommendations being: Ningbo Yunsheng Co.Ltd(600366) , Yantai Zhenghai Magnetic Material Co.Ltd(300224) , Earth-Panda Advanced Magnetic Material Co.Ltd(688077) , Innuovo Technology Co.Ltd(000795) , Jiangsu Huahong Technology Co.Ltd(002645) .
