The safety issue of rare earths attracts attention again, and the industrial chain is expected to benefit

Supply security is crucial, and the rare earth industry chain is getting healthier. Safe procurement of rare earths is a very critical part of the current strategic development of various countries. As a country with the most concentrated rare earth resources and the most advanced mining technology, my country is making continuous progress in industrial development. In terms of rare earth supply, the "black rare earth" has been cleared, the industry concentration has continued to increase, and the development of the industrial chain has become healthier. At the same time, with the continuous popularization and rapid development of intelligence, the era of "everything driven" is coming. Some application scenarios of rare earth permanent magnets will be gradually opened, including industrial motors, new energy vehicles, automated robots, etc. application scenarios may also gradually increase. In addition, the policy is driving the penetration rate of rare earth permanent magnets in industrial motors will gradually increase under the condition of increasing energy consumption standards. With the steady rise of the entire rare earth price and the opening of the application scenarios of magnetic materials, it will be an incremental market worth looking forward to.

Downstream demand continues to grow, and wind power and energy-saving home appliances will contribute new growth. The country continues to upgrade its emphasis on the supply security of rare earths. The core reason is that the global demand for rare earth permanent magnets continues to increase. In the downstream demand, green home products such as energy-saving home appliances and inverter air conditioners all use our energy efficiency to reduce the energy consumption of the motor. The improvement of energy efficiency means the need to use more efficient rare earth permanent magnet motors. In terms of wind power, wind power has developed rapidly at present, and new energy power generation will bring about an exponential growth in the demand for rare earths in the future. Therefore, we can see that under the construction plan of digital China, many fields in the future will actually have a demand for rare earths. The foreseeable and unforeseen demand for rare earths, energy-saving home appliances will continue to contribute new increments.

The valuation of the sector is low, and investment certainty is strong. It is recommended to pay attention to relevant opportunities. At present, the valuation of the sector is relatively low. With the support of policy dividends, the price of rare earths has risen steadily. The entire magnetic material enterprise has expanded the production capacity of rare earths and optimized the product structure, making a profit elasticity of the entire industrial chain quarter-on-quarter. Therefore, we believe that the current industry chain is indeed a very cost-effective environment for investment, and we are optimistic about the opportunities brought about by the revaluation of its core asset prices with global pricing power.