Intelligence Finance and Economics App learned that according to media reports, the escalation of the situation in Myanmar has led to a stagnation in local rare earth mining, which has a significant impact on the domestic supply of medium and heavy rare earths. Currently, the Myanmar mine is still in a state of stagnation, and it is expected that the impact of this event will continue for some time. For the future market, Tianfeng Securities believes that under the background of optimizing the supply and demand structure of the industry, the central price of rare earths will significantly increase. More importantly, it is expected that the sustainability of price increases and profit realization will improve, thereby the elasticity of stock prices to rare earth prices is also expected to continue to expand. Relevant symbols: JL Mag Rare-Earth (06680), Aluminum Corporation of China (02600), China Rareearth (00769), MMG (01208).

Myanmar is mainly focused on medium and heavy rare earth ion ore and is the third largest rare earth ore producing area in the world. If the blockade continues for more than two months, it may lead to a shortage of its raw material supply. According to the General Administration of Customs data, from January to September this year, China imported 0.031 million tons of rare earth oxide from Myanmar, accounting for 74.9% of the total oxide imports during the same period.

In addition to overseas supply disturbances, since the beginning of this year, rare earth prices have continued to fluctuate and search for the bottom, with third-quarter rare earth prices approaching the cost line of some high-cost mines. An official from China Northern Rare Earth stated that the rare earth industry is currently in the bottom range and a trend of stabilization and rebound has emerged, with market sentiment also building up. Any movements in the market will have a significant stimulus on the rare earth industry, primarily due to the release of market expectations.

Furthermore, on October 1st, the "Rare Earth Management Regulations" were officially implemented, which will further control activities such as the extraction, production, and sale of rare earth resources. The second batch of total control indicators for rare earth mining, smelting, and separation have also been issued this year, with cumulative mining and smelting indicators increasing by 5.88% and 4.16% respectively compared to last year. The growth rates have decreased by 15.5 and 16.6 percentage points respectively.

On the other hand, on the demand side, downstream emerging sectors such as new energy vehicles and humanoid robots are expected to continue their high-speed growth. An official from China Northern Rare Earth revealed that market demand has been relatively stable recently, and there is also improvement in orders for downstream magnetic material factories. The company's upstream rare earth raw material end has been operating at full capacity, with the current operating rate of magnetic material companies at around 80%. The company's third-quarter performance has narrowed year-on-year decline, showing sequential improvement, mainly driven by the growth in rare earth product sales and significant price support.

On November 1st, China Northern Rare Earth released the November rare earth product listing prices, which have been raised for three consecutive months. SMM data shows that on the day of the release of the November listing price by China Northern Rare Earth, the mainstream transaction price of praseodymium and neodymium oxide in the spot market ranged between 0.422 million yuan and -0.424 million yuan per ton, while the market price for praseodymium and neodymium metals ranged between 0.52 million yuan and -0.525 million yuan per ton, slightly higher than the November listing prices of China Northern Rare Earth. However, SMM also stated that there is currently a strong wait-and-see sentiment in the market.

Huafu Securities released research reports that in the medium to long term, the uncertainty of overseas supply will increase significantly, and the domestic indicators are expected to continue to slow down. New energy demand and humanoid robots will sequentially drive demand growth. The 'old for new' policy is expected to bring both existing and incremental demand. As the most concentrated supply of non-ferrous varieties, even in the case of oversupply, prices are relatively controllable. Far-term rare earth supply and demand is also expected to shift from surplus to tight balance.

Xiangcai Securities research report pointed out that in the short term, rare earth magnetic material prices are expected to seasonally rebound with the support of costs and the arrival of peak demand season. The industry performance is currently at the bottoming stage and still needs to gather momentum for the right opportunity. By the end of September, the stimulation of macro policies beyond expectations has driven an overall increase in market risk appetite, pushing the industry to follow the rapid market rise by relying on industry capacity clearance and performance improvement for digestion.

Tianfeng Securities believes that a dominant pattern has formed in the north and south major groups on the supply side, while the demand side has shifted to applications dominated by new energy and energy-saving technologies. Against the backdrop of the optimization of the industrial supply and demand pattern, the central price of rare earths will significantly rise. More importantly, the sustainability of price increases and the improvement in profit realization will be enhanced, thereby magnifying the stock price's elasticity to rare earth prices.

Related concept stocks:

JLMag Rare-Earth (06680): JLMag Rare-Earth stated at the earnings conference that currently rare earth prices are still at the bottom of a large cycle compared to the past, showing a certain degree of fluctuations. As a leading supplier of high-performance rare earth permanent magnets materials in the new energy and energy-saving environmental protection fields, the company keeps rare earth price changes relatively stable, which is conducive to the development of the rare earth permanent magnets materials industry and also beneficial to the company's operational performance. Based on the company's values of 'customer orientation, value co-creation,' it has always adhered to integrity and contract performance, ensuring customer delivery. To this end, the company has established a sound rare earth raw material procurement mechanism to hedge risks. In the future, the company will closely monitor the trend of rare earth raw material prices and flexibly and prudently adjust inventory and procurement strategies.

Aluminum Corporation of China (02600): The company is a leading enterprise in China's aluminum industry, engaging in exploration and mining of bauxite, coal, and other resources, as well as the production, sales, technical research and development of alumina, primary aluminum, aluminum alloys, carbon products, and integrated heat and new energy power generation. The company previously stated at an earnings conference that as of the end of June 2023, it held a 23.94% stake in China Rare Earth Limited (referred to as 'China Rare Earth').

China Rare Earth (00769): The company is a Hong Kong investment holding company mainly engaged in the manufacturing and sale of rare earth and refractory products. Rare earth products include metal oxides and fluorescent products. The company's rare earth products are used in various industrial products such as modern high-tech and traditional products, including electric appliances, computers, electric motor drives, LCD displays, digital audio and video discs, permanent magnet materials, magnetic memory, fiber optic communication, superconductors, mobile phone battery, precision optical instruments, as well as eco-friendly and energy-saving products.

MMG (01208): The company is a core basic metal mining enterprise under China Minmetals Group, mainly engaged in the selection and operation of copper and zinc ore, owning two world-class mine assets Las Bambas copper mine and Dugald River zinc mine.