In August, influenced by the 'hanging high' of China Northern Rare Earth, the contraction of indicators, reduced imports of minerals, the gradual increase of downstream orders, and the impact of inventory replenishment, rare earth prices fluctuate with a bias towards strength.
According to the Securities Times app, Huafu Securities published a research report stating that in August, affected by the 'hanging high' of China Northern Rare Earth, the contraction of indicators, reduced imports of minerals, the gradual increase of downstream orders, and the impact of inventory replenishment, rare earth prices fluctuated with a bias towards strength. After September, due to downstream orders falling short of expectations and price retreats caused by fear of heights, along with lower metal auction prices, but as year-end terminal sales surge and with the implementation of the 'Regulations,' there are expectations for improvements in both supply and demand. It is expected that rare earth will continue to show a trend of fluctuation with a bias towards strength. The rare earth sector is currently at a bottom, and under the pattern of fluctuation with a bias towards strength, opportunities for left-side layout will emerge.
Imported rare earth ore: Expectations for reduction in Burmese and American mines. 1) Burmese Mine: In August, the import volume of Burmese mines was 1,972 tons of REO, -4% month-on-month, -46% year-on-year. From January to August, the cumulative import of Burmese mines was 0.0265 million tons of REO, -4,417 tons REO / -14% year-on-year. Rare earth mines in the Burmese region are expected to resume production gradually at the end of September, with an expected increase in import volume in October. 2) American Mine: In August, 3,775 tons of REO were imported from American mines, +99% month-on-month, +7% year-on-year. From January to August, the cumulative import of American mines was 0.0201 million tons of REO, -0.0053 million tons REO / -20% year-on-year. MP has begun construction of separation capacity, and it is expected that the overall import of American mines will decrease.
Oxides: Orders in August led to higher operating rates for separation enterprises. 1) Neodymium Praseodymium Oxide: In August, the production was 8,230 tons, +3% month-on-month, +25% year-on-year. From January to August, the cumulative production was 0.064 million tons, +0.0128 million tons / +25% year-on-year. August marked an early end to the off-season, with production of separation enterprises basically restored. 2) Dysprosium Oxide: In August, the production was 310 tons, +2% month-on-month, +11% year-on-year. From January to August, the cumulative production was 2,415 tons, +660 tons / +38% year-on-year. 3) Terbium Oxide: In August, the production was 52 tons, +2% month-on-month, +4% year-on-year. From January to August, the cumulative production was 422 tons, +105 tons / +33% year-on-year.
Metals: Differentiated demand for light and heavy rare earths. 1) Light Rare Earth: In August, the production of neodymium praseodymium metal was 6,859 tons, +2% month-on-month, +37% year-on-year. From January to August, the cumulative production was 0.053 million tons, +0.018 million tons / +34% year-on-year. Increased downstream orders, stocking up for the 'Golden September and Silver October' peak season, while neodymium praseodymium prices steadily increase, leading to an increase in metal production. 2) Heavy Rare Earth: In August, the production of dysprosium iron was 135 tons, -15% month-on-month, -6% year-on-year; from January to August, the cumulative production of dysprosium iron was 1,352 tons, +213 tons / +19% year-on-year. In August, the production of terbium metal was 23 tons, -3% month-on-month, -20% year-on-year; from January to August, the cumulative production of terbium metal was 213 tons, +16 tons / +8% year-on-year. Demand for dysprosium and terbium metals fell short of expectations, with ample on-site inventory.
Magnetic Materials: As August approaches the peak season, the operating rate of magnetic material enterprises increases. In August, the production of neodymium iron boron blanks was 0.0279 million tons, +6% month-on-month, +40% year-on-year; from January to August, the cumulative production was 0.209 million tons, +0.057 million tons / +38% year-on-year. With increased downstream orders near the peak season, the operating rate of magnetic materials has risen. The total export of the four types of magnetic materials was 7,906 tons in August, +3% month-on-month, +24% year-on-year; from January to August, the cumulative export volume was 0.057 million tons, +2,317 tons / +4% year-on-year.
Supply and Demand: Reduced surplus of light rare earths in August: 1) Light Rare Earth: In August, there was a surplus of 263 tons of neodymium praseodymium oxide, a reduction in surplus; from January to August, there was a cumulative surplus of 1,800 tons. 2) Heavy Rare Earth: In August, there was a surplus of 17 tons of terbium, with a cumulative surplus of 90 tons from January to August. In August, there was a surplus of 162 tons of dysprosium, with a cumulative surplus of 930 tons from January to August.
Investment recommendation: Stocks: It is recommended to focus on China Rare Earth (00769, 000831.SZ), China Northern Rare Earth (600111, SH), and JL Mag Rare-Earth (06680, 300748.SZ).
Risk reminder: Downstream demand falls below expectations.
