Where to begin
The report from China Securities Co., Ltd. highlights that, according to General Administration of Customs data, July rare earth exports saw a significant drop while average prices increased. The export mix is shifting toward higher-value heavy rare earth products, with overseas markets accepting elevated raw material costs, extending the global rare earth supply tightness. There is no incremental supply in the rare earth sector, with separation enterprises maintaining stable production and previously halted operations lacking plans to restart. Downstream demand remains reasonably supported by essential needs, and long-term demand expectations are positive. Near-term rare earth prices are expected to be stable with a slight upward bias.
Key insights from China Securities
Lithium: According to Bai Chuan Ying Fu, the average price of industrial-grade lithium carbonate this week is 138,000 yuan per ton, down 3.5% from last week, while battery-grade lithium carbonate averages 141,000 yuan per ton, a 3.4% decline. On the supply side, this week's lithium carbonate production shows a pattern of maintenance-related reductions offset by new capacity ramp-ups. Some lithium salt plants are undergoing maintenance, causing short-term output cuts, but new capacity continues to ramp up, partially offsetting these losses. Total supply disruption is limited. Zimbabwean spodumene concentrate has arrived at ports, but domestic lithium ore supply remains tight, creating a rigid constraint on lithium salt output. The restart of production in Jiangxi mines is still in the process and unlikely to contribute significant short-term volumes, while long-term expectations of future lithium resource releases weigh on sentiment. Inventory levels are continuing to decline, marking a multi-week downward trend. Lithium salt plants are holding back spot sales, leading to a slight accumulation of factory inventory, though inventories at traders and downstream material producers are being consumed. The futures warehouse receipt count stands at 28,123 tons from the previous trading day. On the demand side, downstream support remains steady this week. Electrochemical energy storage maintains high activity as a core regulatory pathway, and iron lithium phosphate plant operating rates remain elevated, providing stable underlying demand for lithium carbonate. A survey of 27 battery enterprises by Bai Chuan Ying Fu indicates total production scheduling for Chinese battery companies in August 2026 is 311.85 GWh, a 5.71% increase month-over-month, highlighting ongoing production resilience. However, downstream material producers hold relatively ample inventories, leading to a slower overall procurement pace. They show little inclination to chase prices higher following a rebound, focusing on essential purchases, and a large-scale concentrated restocking has yet to occur, resulting in modest spot market transaction volumes. On the resource side, the importance of China's self-sufficiency in lithium resources is underscored, with recommendations to monitor Yongxing Materials, Sinomine Resource Group, Tianqi Lithium, and Ganfeng Lithium.
Nickel: This week, the LME nickel price is $16,970 per ton, down 1.7% from last week, while the SHFE nickel price is 130,460 yuan per ton, a 0.9% decline. SHFE nickel inventory is 113,300 tons, LME nickel inventory is 264,400 tons, and total inventory is 377,700 tons, down 0.1% from last week. On the supply side, this week's nickel sulfate supply has decreased, with the industry's average operating rate falling. Some nickel sulfate smelters have reduced production loads due to cost pressures, and certain production lines are undergoing flexible maintenance, with a few plants halting operations entirely. Short-term, smelters show little willingness to actively increase output. On the demand side, battery-grade nickel sulfate demand remains at essential levels this week, with ternary precursor producers mainly executing long-term contracts, and the market has not yet entered a large-scale pre-season restocking phase. Lithium iron phosphate continues to encroach on the ternary battery market share, somewhat dampening nickel sulfate's demand elasticity, as orders further concentrate on leading precursor companies with raw material advantages. Electroplating-grade nickel sulfate maintains regular procurement, with no significant increase. For nickel, attention is advised on Huayou Cobalt and Chengtun Mining Group.
Rare Earths and Magnets: Rare earth prices have declined this week. As of Thursday, the average market price of praseodymium neodymium oxide is 736,500 yuan per ton, down 1.47% from the previous Friday; dysprosium oxide averages 1.39 million yuan per ton, down 0.71%; and terbium oxide averages 6.675 million yuan per ton, down 0.74%. From a supply-demand perspective, no incremental supply is available, with separation enterprises operating steadily and previously halted plants lacking restart plans. Oxide product spot supply has no increase, keeping market supply tight. Metal production is stable, with no reports of metal plant stoppages or cuts, and metal supply is relatively more abundant, pending downstream consumption. Long-term demand is stable, with downstream magnet material producers maintaining steady operations, showing no significant reduction in blank production. Long-term demand is satisfactory, with limited short-term new orders, mainly due to persistently high raw material prices, leading to phased order placements. This does not significantly drive the market, but essential demand support is adequate, and long-term demand expectations remain positive. Recommendations include monitoring Ningbo Yunsheng and JL Mag Rare-Earth.
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