As one of the important upstream industries in the new energy industry chain, the operation of rare earth industry has also attracted the attention of investors.
According to the data of choice financial terminal, as of April 14, three of the four listed companies in the rare earth sector of the A-share market (classified by Dongcai industry) have released the performance forecast for the first quarter of 2022.
In terms of profitability, thanks to the rapid growth of new energy vehicles, wind power and motor markets, the demand for rare earth permanent magnet materials has increased. As a rare earth industry upstream of the industrial chain, its business performance has also been greatly improved.
According to the data, the net profit attributable to the shareholders of the parent company of rare earth listed companies that have released the performance forecast for the first quarter of 2022 is expected to increase year-on-year, in order of growth range, Shenghe Resources Holding Co.Ltd(600392) (an increase of 141.41%), China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) (an increase of 122.59%) and Rising Nonferrous Metals Share Co.Ltd(600259) (an increase of 121.48%).
Qi Hailu, President of Beijing Teyi sunshine new energy, said in an interview with Securities Daily that under the background of China's "double carbon" goal, new energy industries such as new energy vehicles and wind power generation have made great progress in recent years, which has also exacerbated the demand intensity of rare earth permanent magnet products and energy-saving motors.
"As a strategic material, rare earth products, under the continuous improvement of national control, its industry production and operation are also rapidly upgrading to high quality. With the continuous tight supply and demand pattern of the industry, the continuous rise of rare earth raw material prices has become a normal state." Qi Haiyu said.
In fact, as Qi Haiyu said, rare earth prices have risen sharply since last year.
According to the data provided by the business society, the rare earth index maintained a volatile upward trend from January 25, 2021 to the end of the year, with a cumulative increase of 92.36% in the whole year after breaking the historical record of 469 points set in 2017. At the beginning of 2022, it continued to rise to 1007 on February 23, setting a new historical record and then fell back. As of the closing on April 13, it had fallen by 2.48% in the year, with a year-on-year increase of 39.61%.
In this regard, Wang Meiting, a researcher of Bank Of Beijing Co.Ltd(601169) Research Institute, said in an interview with the reporter of Securities Daily that the strength of rare earth prices at the beginning of this year is closely related to the rapid development of downstream new energy fields, while the high and volatile decline of rare earth prices since mid and late February is due to the weakening of macroeconomic expectations, There are also short-term factors such as production slowdown caused by epidemic prevention and control in the fields of automobile and high-end equipment manufacturing.
According to Wang Meiting, the current rare earth market price changes have two core logic. First of all, the concentration of rare earth enterprises in the upstream and downstream industries should be continuously improved through the reorganization of China's rare earth industry. For example, in 2021, China integrated a number of rare earth enterprises to form China's rare earth, which partially alleviated the previous situation of fragmentation, competition and price reduction through cross shareholding. Secondly, from the perspective of supply and demand, the annual growth rate of China's rare earth mining quota is 20%, and the first batch of rare earth quotas in 2022 also increased by 20% compared with the same period last year. The rapid growth in the field of new energy has brought huge demand for rare earth, resulting in an obvious mismatch between supply and demand. In addition, the continuous rise of China's international commodity prices has also brought good fundamentals to the rise of rare earth prices.
"In the future, under the background of stable macroeconomic growth, rare earth as an important strategic material has more unique value. In addition, the government can regulate the price of rare earth by allocating rare earth export quotas. Rare earth has become an important strategic resource. It is expected that the general direction of improving the concentration of the industry will not change." Wang Meiting further said that if listed companies in the rare earth sector can further strengthen the extension to the upstream and downstream value chain, it will bring higher performance growth for enterprises and higher sustainability of performance growth in the future.
