CITIC SEC: Rare earth prices may stabilize and rebound; pay attention to the rebound in the rare earth sector.

CITIC SEC released a research report stating that under the constraints of indicators and the background of declining imports, the rigidity of rare earth supply continues to strengthen. Affected by tightening tax policies, the operating rate of waste recycling enterprises remains low. The industry's basic demand for restocking, combined with the approaching peak season, is expected to drive a recovery in demand. Emerging fields such as Siasun Robot & Automation, low-altitude economy, and industrial motors are likely to open up long-term growth potential for demand. The supply-demand pattern in the rare earth industry may continue to be tight, and the rising prices are expected to exceed expectations in the interim reports of rare earth industry chain companies. We continue to recommend the strategic allocation value of the rare earth industry chain. CITIC SECs main points are as follows: Market Review: Decline in the Rare Earth and Magnetic Materials Sector On July 17, the CITIC Rare Earth and Magnetic Materials Index closed at 3293.0, with a weekly decline of 13.2%, a monthly decline of 26.5%, and a year-to-date decline of 7.3%; the CITIC Nonferrous Metals Index closed at 11247.8, with a weekly decline of 7.3%, a monthly decline of 19.5%, and a year-to-date decline of 14.1%; the CSI 300 Index closed at 4529.1, with a weekly decline of 5.3%, a monthly decline of 8.2%, and a year-to-date decline of 4.0%. Prices: Increase in Light and Heavy Rare Earth Prices Within the Month Data from the China Rare Earth Resources and Technology Industry Association shows that as of July 17, 2026, the price of Dysprosium oxide, a major product of heavy rare earths, was 1.405 million yuan/ton, with a monthly increase of 0.4% and a year-to-date increase of 6.4%; the price of Terbium oxide was 6.855 million yuan/ton, with a monthly increase of 7.1% and a year-to-date increase of 15.3%; among light rare earth oxides, the price of Neodymium-Praseodymium oxide was 755,000 yuan/ton, with a monthly increase of 6.1% and a year-to-date increase of 26.4%; the price of Neodymium oxide was 805,000 yuan/ton, with a monthly increase of 3.1% and a year-to-date increase of 33.9%. The price of Neodymium-Praseodymium oxide continues to rise. Imports and Exports: Rare Earth Ore Imports Decreased Month-on-Month in June 2026, While Overseas Rare Earth Ore Prices Increased Month-on-Month According to data from the General Administration of Customs, in June 2026, Chinas rare earth ore imports totaled 6,014.0 tons, a year-on-year decrease of 27.7% and a month-on-month decrease of 6.9%. The import unit price was $20,656.0/ton, a year-on-year decrease of 8.8% and a month-on-month increase of 23.9%. From January to June, Chinas cumulative rare earth ore imports reached 51,981.1 tons, a year-on-year decrease of 7.0%, with an average import unit price of $21,228.9/ton, a year-on-year increase of 35.7%. Fundamental Outlook: Supply Rigidity Strengthens, Supply-Demand Pattern Expected to Continue Improving Recently, some raw ore separation enterprises have ceased operations, and with the low operational rate of waste recycling enterprises, the supply of Neodymium-Praseodymium oxide has been tightened. Coupled with the rainy season in Southeast Asia, the rigidity of rare earth supply has further strengthened. On the demand side, downstream magnetic material enterprises are primarily restocking based on basic demand. Considering that the demand side is gradually entering peak season, it is expected that the supply-demand pattern of rare earths will continue to improve, with the possibility of rare earth prices stabilizing and rebounding. Overseas Rare Earth Industry Tracking: Overseas Incremental Projects Generally at Preliminary Stages According to Shanghai Metal Network, 1) Exploration has started at the Ilimaussaq rare earth mine in Greenland, with a total rare earth oxide grade (TREO) of 2.3%; 2) The North Carolina rare earth mine of Linich reached approval, with a TREO grade of 0.5% and an annual production capacity of 5,340 tons of REO; 3) France's Carester will build a rare earth separation plant in Malaysia with an annual processing capacity of about 13,000 tons of rare earths; 4) Lynas is collaborating with South Korea's JS Link to build a rare earth permanent magnet factory in Malaysia, with a capacity of about 3,000 tons; 5) Hastings has updated the final feasibility study results for the Yangibana rare earth project, with Stage 1 planned to produce an average of 37,000 tons of concentrate per year, with estimated cash operating costs of $20.75 per kilogram of TREO concentrate. Investment Strategy: Rare Earth Prices Expected to Stabilize and Rebound, Focus on Rare Earth Sector Rebound On the policy front, the rare earth management regulations will officially take effect in October 2024, marking the industrys entry into an era of high-quality, standardized development. According to the Ministry of Commerce's official website, China will suspend the implementation of relevant export control measures announced on October 9, 2025, for one year; on the import side, according to the General Administration of Customs, Chinas imports of rare earth ores decreased month-on-month in June 2026; on the demand side, downstream demand from sectors such as new energy vehicles, consumer electronics, variable-frequency air conditioners, and wind power is expected to continue increasing. Emerging fields such as Siasun Robot & Automation, the low-altitude economy, and industrial motors are likely to open up long-term growth spaces for demand. The supply-demand pattern in the rare earth industry may continue to be tight, and the rare earth permanent magnet sector is expected to continue upward movement. As prices rise, the interim reports of rare earth industry chain companies are expected to exceed expectations. We continue to recommend the strategic allocation value of the rare earth industry chain and maintain the industrys outperform rating. Risk Factors: The commercialization process of Siasun Robot & Automation may not meet expectations; overseas rare earth development and expansion may exceed expectations; downstream consumer demand may fall short of expectations; rare earth prices may experience significant volatility; the enforcement of policies such as crackdowns on illegal activities and environmental protection may be weaker than expected.