Multiple factors driving rare earth price rising institutions optimistic about price rising sustainability

 Multiple factors driving rare earth price rising institutions optimistic about price rising sustainability

The application end of NdFeB mainly includes automobile, new energy vehicle, frequency conversion air conditioner and so on. In the short term, the proportion of domestic household appliances with variable frequency air conditioners continues to increase, which is expected to bring about a sustained growth rate of more than 60% in the demand for magnetic materials for air conditioning from 2021 to 2022; the global new energy vehicles maintain a high growth rate, and it is expected that the demand for high-performance NdFeB will exceed 60000 tons by 2025 with the increase of permeability.

In addition, consumer electronics has stabilized, wind power is still in the rush to install cycle, high-end magnetic materials are fully restored to production, leading magnetic material factories continue to expand, and the demand for replenishment brings about the linkage of light and light rare earth prices, which is expected to continue.

In addition, it is worth noting that the export control law makes international customers worry about rare earth being included in the control list, and the export side increment is obvious. According to a survey conducted by Baichuan Yingfu, some businesses said that affected by the export control law, foreign enterprises want to lock orders in advance, so the foreign trade demand is concentrated.

Some securities analysts believe that with the export control law of the peoples Republic of China officially takes effect on December 1, Chinas rare earth export supply may be further reduced. As the global market is highly dependent on Chinas rare earth, the global supply of rare earth may further shrink after the implementation of export control, which is expected to boost the price of rare earth.

Tianfeng Securities pointed out that Myanmars import channels continued to be limited, and domestic demand was the first to recover. In the third quarter of this year, the average gross profit margin of rare earth listed companies was restored to 12%. With the comprehensive repair of domestic demand, the overseas epidemic situation gradually stabilized, and the resonance of policy, cost and demand is expected to bring about a certain sustainability of rare earth price rise.

In terms of investment opportunities, Tianfeng securities suggests that it should pay attention to Guangsheng nonferrous metals and Minmetals rare earths, which are the subject of medium and heavy rare earths with strong elasticity, and the northern Rare Earths with light leading position. In addition, considering the long certification period of high-end magnetic materials for new energy, the growth rate of leading enterprises with structural improvement is stronger than that of the industry, and the theme opportunities are expected to become trend opportunities. Focus on leading Zhenghai magnetic materials, Jinli permanent magnet, etc.

Source of this article: Yang Bin, editor in charge of CFA_ NF4368