The formal implementation of the "Regulations for the Implementation of the Mineral Resources Law" has officially designated 36 mineral product categories, including rare earths, into the national strategic mineral catalog, indicating a continued tightening of industry controls. Concurrently, the expansion of AI computing power is transmitting demand from computing chips and optical modules to the electronic components sector, leading to significant changes in the demand structure for passive components like MLCCs. This is gradually revealing the demand for rare earth materials, often termed "computing power metals."
Marginal changes on the supply side are further solidifying this logic. Following the tightening of rare earth supply overseas, raw material shortages are transitioning from expectation to reality. Reports indicate that domestic dental zirconia enterprises have confirmed receiving notifications from Japan's Tosoh Corporation regarding the suspension of zirconia powder supply. Yttria-stabilized nano-zirconia, a high-performance ceramic material containing yttrium oxide, has seen a significant widening in its price differential between domestic and international markets due to constrained overseas rare earth supply. High-end materials incorporating rare earths from China are expected to capture a larger share of the global market based on their cost-performance advantage, potentially benefiting the entire rare earth industry chain from upstream to downstream.
Recent industry export data provides direct evidence of the tightening global rare earth supply pattern. Citing official trade data released by Japan's Kyodo News, China's exports of rare earth magnets to Japan amounted to only 123 tons in May this year, a month-on-month decline of 34.6%. Notably, this export figure has remained below 200 tons for three consecutive months. Given China's long-standing dominance in the global rare earth industry chain, coupled with the country's consistent strict control over mining quotas and standardized export approvals, as well as persistent instability in overseas supply chains, the medium to long-term tight supply-demand balance in the rare earth sector appears difficult to reverse.
As an indispensable key raw material for high-tech industries, the resource security premium and strategic value of rare earths are being reassessed by the market. Against the backdrop of this alignment between industrial logic and supply patterns, market capital's attention to the rare earth sector continues to intensify. Trading activity in the market's first rare earth industry-themed ETF, the Rare Earth ETF Huatai-PineBridge (516780), remains robust. Its average daily turnover last week reached 232 million yuan, a significant increase from the year-to-date average of 191 million yuan. Its latest fund size stands at 2.526 billion yuan, highlighting its relatively strong liquidity advantage.
A recent research report from Guojin Securities expresses a comprehensively positive outlook on AI-empowered tin, rare earths, tungsten, and molybdenum. Among these, dysprosium oxide (a heavy rare earth) may benefit from MLCC demand, showing a notable price recovery trend. Since the beginning of the year, the price center has been continuously rising, which may be closely related to supply-side policy documents released for 2024-2025, indicating ongoing industry supply-side reforms. The year-on-year decrease in full-year exports for 2025 and the significant increase in exports from the beginning of 2026 to date suggest that overseas markets still have substantial restocking demand. The rare earth sector may continue to evolve with a dual increase in both valuation and earnings.
It is reported that the Rare Earth ETF Huatai-PineBridge (516780) closely tracks the CSI Rare Earth Industry Index. This index selects securities of listed companies involved in businesses related to rare earth mining, processing, trading, and application to reflect the overall performance of listed companies in the rare earth industry. Its top five constituent stocks are China Northern Rare Earth (Group) High-Tech Co., Ltd., Xinjiang Goldwind Science & Technology Co., Ltd., Xiamen Tungsten Co., Ltd., China Rare Earth Holdings Limited, and GEM Co., Ltd., all of which are competitive leading enterprises within the industry.
The 2025 product annual report shows that as of December 31, 2025, the number of holders of the Rare Earth ETF Huatai-PineBridge (516780) reached 60,300 households, making it the only rare earth-themed ETF in the entire market at that time with over 50,000 holders.
As one of China's first ETF managers, Huatai-PineBridge Fund has been dedicated to the field of index investment for over 19 years, creating transparent, convenient-to-trade, and low-cost index tool products for investors, such as the CSI 300 ETF Huatai-PineBridge (510300) and the A500 ETF Huatai-PineBridge (563360). As of the end of March 2026, the ETFs under the company's management had cumulatively generated profits exceeding 223.4 billion yuan for holders over the preceding two years, making it one of only three public fund companies in the entire A-share market during that period to achieve cumulative profits exceeding 200 billion yuan.
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