According to a research report released by CICC, Chinese customs data shows that China exported 5,577 tons of rare earth magnetic materials in July, representing year-over-year and month-over-month increases of 6% and 75% respectively. Since April this year, China's magnetic material exports initially declined before recovering, with July exports exceeding the average level of the same period over the past three years by 10%. As of August 20, domestic praseodymium-neodymium oxide was quoted at 624,000 yuan per ton, up 57% from the beginning of this year and 39% higher than the peak in the first half of the year. Given the arrival of peak demand season and improvement in export demand, combined with the contraction of Myanmar imported ore and limited supply increases from other sources, the tightening supply-demand balance for domestic praseodymium-neodymium oxide is expected to drive further price increases.
CICC's main viewpoints are as follows:
Since April this year, China's magnetic material exports initially declined before recovering, with July exports exceeding the average level of the same period over the past three years by 10%. According to Chinese customs data, China's rare earth magnetic material export volumes in April and May showed year-over-year declines of 43% and 74% respectively, with month-over-month decreases of 51% and 53%. In June and July, rare earth magnetic material export volumes showed year-over-year changes of -38% and +6% respectively, with month-over-month increases of 157% and 75%. The cumulative export volume for January-July showed a year-over-year decline of 15%, while the April-July cumulative figure declined 36% year-over-year. Given the staged pressure on domestic rare earth magnetic material exports from April to June that led to accumulated export orders, and with the accelerated progress of rare earth-related export approvals, magnetic material exports are expected to continue recovering.
Arrival of downstream procurement peak season combined with export improvement supports overall positive domestic magnetic material demand. According to CICC's calculations, rare earth magnetic material exports in 2024 account for approximately 24% of total domestic demand. Considering that we are currently in the peak procurement season for magnetic material downstream applications, combined with export improvements, overall domestic magnetic material demand is expected to remain positive.
Contraction of Myanmar imported ore and limited supply increases from other sources tighten domestic rare earth supply. Regarding imported ore, China's REO imports from Myanmar in July showed year-over-year and month-over-month changes of +2% and -60% respectively, while rare earth ore imports from the United States increased 37% year-over-year. Considering ongoing disruptions in Myanmar and MP Materials' announcement on April 17 to stop exporting rare earth concentrates to China, imported ore increases remain limited. Domestically, given the decline in cumulative magnetic material exports from January to July and the current low rare earth price environment, domestic mining supply is unlikely to see significant growth.
In the short term, domestic praseodymium-neodymium oxide prices are expected to rise further. As of August 20, domestic praseodymium-neodymium oxide was quoted at 624,000 yuan per ton, up 57% from the beginning of this year and 39% higher than the peak in the first half. Given the arrival of peak demand season and improvement in export demand, combined with the contraction of Myanmar imported ore and limited supply increases from other sources, the tightening supply-demand balance for domestic praseodymium-neodymium oxide is expected to drive further price increases.
In the medium to long term, from 2025-2027, domestic praseodymium-neodymium oxide supply and demand are expected to gradually tighten, pushing up the price center for praseodymium-neodymium.
Regarding investment targets, for rare earth upstream companies, CICC recommends focusing on leading companies with strong resource attributes and good production growth prospects, including China Northern Rare Earth(Group)High-Tech Co.,Ltd. (600111.SH) and Rising Nonferrous Metals Share Co.,Ltd. (600259.SH). For rare earth magnetic materials, CICC recommends focusing on deep-processing leaders that have positioned early in the humanoid robot sector and are actively expanding in new energy vehicles and energy-efficient motors, including Jl Mag Rare-Earth Co.,Ltd. (300748.SZ, 06680), Ningbo Yunsheng Co.,Ltd. (600366.SH), Beijing Zhong Ke San Huan High-Tech Co.,Ltd. (000970.SZ), and Yantai Zhenghai Magnetic Material Co.,Ltd. (300224.SZ).
Risk factors include: rare earth supply exceeding expectations, unexpected changes in domestic and international policies, and export and downstream demand falling short of expectations.
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