Guo Xin Securities: Total rare earth quantity control policy introduced, price center expected to move up

Guo Xin Securities released a research report stating that the latest policies highlight the strategic position of rare earth as a strategic resource through full-chain supervision (from mining to circulation) and group integration. With "full-caliber supply control + full-process traceability" as the core, it marks the entry of the China Rare Earth Resources And Technology industry into a stage of refined governance. In the short term, it is necessary to observe the detailed rules of indicator allocation and the implementation of control on imported ores. In the long term, the resonance between policies and emerging demands (such as Siasun Robot & Automation, low-altitude economy) is expected to promote the upgrading of the rare earth industry chain to higher added value. Top companies, relying on their resource integration capabilities and compliance advantages, may lead to a restructuring of the industry landscape. On February 19, 2025, the Ministry of Industry and Information Technology of China issued the "Total Volume Control Management Measures for Rare Earth Mining and Rare Earth Smelting and Separation (Interim) (Draft for Public Comment)" and the "Management Measures for Tracing Information of Rare Earth Products (Interim) (Draft for Public Comment)", which are important supplementary rules following the implementation of the "Rare Earth Management Regulations" in October 2024. Guo Xin Securities' main viewpoints are as follows: Supply side: Strong constraint, industry structure optimizes rapidly 1. Clear expectations of supply contraction. 1) Import ore ratio: According to the 2024 report of the United States Geological Survey (USGS), China's import of rare earth ore accounts for 22% of global rare earth supply, with Burmese ore accounting for 9% of global cerium neodymium supply. 2) Burmese ore import volume: Data from the General Administration of Customs of China shows that the import of rare earth ore from Myanmar decreased by 18% in 2024. 3) Illegal production capacity ratio: Interpretation documents of the Ministry of Industry and Information Technology in 2023 on "Normative Conditions of the Rare Earth Industry" show that illegal rare earth production accounts for about 10% of the total market supply. 2. Leading integration by top companies. China Rare Earth Resources And Technology Group (China Heavy Rare Earth) and China Northern Rare Earth (Light Rare Earth) are the only two rare earth mining groups in China, collectively controlling approximately 90% of the country's rare earth quotas (data source: Ministry of Natural Resources "2024 National Rare Earth Mining Total Control Index"). Price side: Tight supply and demand balance supports upward movement of price center 1. Short-term price fluctuations. Data from the China Rare Earth Resources And Technology industry association show that the rare earth spot price index increased from 176.7 to 181 points after the policy was announced (as of February 20, 2025). 2. Medium- to long-term price mechanism. According to the detailed rules of the 2024 "Rare Earth Management Regulations," the Ministry of Industry and Information Technology proposed "dynamic adjustment of indicator allocation," taking into account market demand and resource reserves. Demand side: Catalyzing long-term growth logic in emerging fields and pushing for transformation to higher added value 1. Demand for humanoid Siasun Robot & Automation. According to the International Federation of Siasun Robot & Automation (IFR), the global shipment of humanoid Siasun Robot & Automation could reach 5 million units by 2030, with each unit requiring approximately 3.5kg of neodymium iron boron. 2. New energy and low-altitude economy. The automobile production of Shanxi Guoxin Energy Corporation increased by 35% year-on-year in 2024, driving a 20% growth in demand for neodymium iron boron magnetic materials (data source: China Association of Automobile Manufacturers, 2024 statistical report). Strategic significance: Strengthening resource security and international discourse power 1. China's rare earth reserves account for 37% of the world's total and produce more than 60% (data source: USGS "Overview of Mineral Resources in 2024"). 2. The policy controls the entire process to reduce low-price export competition. According to data from the General Administration of Customs of China, the average export price of China Rare Earth Resources And Technology increased by 8% in 2024.