Guotai Haitong: Systematization of regulatory policies, further strengthening of pricing power for rare earths.

Guotai Haitong released a research report stating that on October 9th, the Ministry of Commerce issued two major announcements implementing comprehensive export controls on rare earth-related technologies and overseas items. Compared to the export control policy for medium and heavy rare earths introduced in April, the main incremental information includes: expanding the scope of control targets, extending jurisdiction globally, expanding control measures to include overseas production/processing/re-export, and extending traceability requirements overseas, among others. With the introduction of this policy combination, a comprehensive system of rare earth export controls has been established, further strengthening China's pricing power over rare earths and potentially catalyzing market performance in the sector. The central price point is expected to continue rising in the future, reaffirming the assessment that rare earths are still at the beginning of a large cycle. Guotai Haitong's main points are as follows: Systematized control policies and upgrading the entire supply chain can help enhance China's pricing power over rare earths This round of export control policies has significantly strengthened, expanding the control of rare earth exports to overseas processing and technology transfer. Even if overseas companies obtain ore, they will face challenges in smelting separation technologies and acquiring intermediate products containing Chinese components, which will help consolidate China's competitive advantage throughout the industry chain and strengthen its global pricing power over rare earths. Recent narrow fluctuations in rare earth prices could be sustained by policy catalyzation The price of praseodymium-neodymium oxide has maintained a narrow fluctuation range of 55-57 thousand, with some magnetic material factories reporting that orders will decrease after November. However, with expectations of shrinkage in medium-heavy rare earth smelting and separation capacity and potential continuous policy catalyzation in the future, the price floor support remains strong. The central price point is expected to continue rising in the future, reaffirming the assessment that rare earths are still at the beginning of a large cycle On the supply side, rare earth supply control is expanding from domestic to global materials and technologies, strengthening supply rigidity, and possibly slowing down overseas supply release. On the demand side, in addition to the basic demand base for new energy vehicles/wind power/air conditioning, following the strengthening of China's export control policy, overseas terminals may continue to release inventory replenishment intentions. The supply and demand sides may continue to push up the central rare earth price point, reaffirming the assessment that rare earths are still at the beginning of a large cycle. Recommended targets Recommended targets: Jl Mag Rare-Earth (300748.SZ, 06680), China Rare Earth Resources And Technology (000831.SZ), Rising Nonferrous Metals Share (600259.SH), China Northern Rare Earth (600111.SH). Related tables: Ningbo Yunsheng (600366.SH), Yantai Zhenghai Magnetic Material (300224.SH). Risk warning If policy implementation is weaker than expected, downstream demand is lower than expected, and rare earth prices may fall significantly.