CITIC Securities: In August, the rare earth industry chain entered the traditional peak season for consumption. The rare earth sector has entered the second phase of price increases and profit growth.

The analysis report of CITIC Securities believes that in August, the rare earth industry chain enters the peak consumption season, with the increase in downstream demand driving procurement. According to SMM, some large factories in the magnetic materials industry have already scheduled orders production until mid-September, and export controls are gradually being relaxed. Both domestic and export orders have shown a month-on-month increase in strength. The high prices overseas will gradually affect the domestic market, and with the expectation of peak season stocking, rare earth product prices are expected to rise, ushering in the second phase of price increase and profit growth for the rare earth sector. Since June, several companies in China have been gradually approved for export permits, breaking down the market barriers between domestic and overseas markets; the US Department of Defense has provided a lowest price of $110/kg to MP Materials, much higher than domestic prices, sparking expectations of a rise in prices for praseodymium and neodymium. Since July, rare earth product prices in China have softened and then returned to a rising trend, with prices of praseodymium and neodymium metals rising, providing support for the spot market. In addition, the peak consumer season of "Golden September and Silver October" leads to pre-purchasing of raw materials and expectations of downstream inventory replenishment, making rare earth prices more likely to rise than fall. Referring to the trend of past export-controlled metals, high prices overseas often lead to price increases domestically, resulting in increased profits for companies. The sector will see a double boost in valuation and profits, and it is recommended to actively pay attention to investment opportunities in the sector following the price increases.