China is the only country with a complete rare earth industry chain. After years of industrial policy regulation, China’s rare earth industry has entered a new stage of intensive development. In the context of the upgrading of the global energy structure, the demand space for permanent magnet materials represented by neodymium iron boron is open, the global leading position of China’s rare earth industry chain will continue to deepen, and the strategic resource value of rare earth is expected to continue to increase.
China is the country with the richest rare earth resources in the world. In 2021, the rare earth reserves will be 44 million tons (converted into REO), accounting for more than 35% of the world; The output reached 168000 tons (converted into REO), accounting for more than 60% of the world. After more than ten years of industry regulation and policy control, China’s rare earth industry has entered intensive development from the extensive development stage, the resource concentration has been significantly improved, the industry pattern has been continuously optimized, and the strategic resource position has gradually become prominent. Relying on its unique resource advantages and decades of technological development, China has developed into the only country with a complete rare earth industry chain in the world. The global production capacity of the separation and smelting link accounts for about 90%, and the proportion of magnetic alloy manufacturing accounts for more than 90%, forming an absolute resource advantage and industry chain advantage worldwide.
Rare earth is widely used in military, metallurgy, petrochemical and other fields due to its excellent optical and electromagnetic properties. In the context of the current transformation of the global energy structure, rare earth permanent magnetic materials will serve as the main growth pole to open the space for rare earth demand. Permanent magnet synchronous motors in the field of new energy vehicles contribute to the main increment of permanent magnet demand. We estimate that the CAGR of NdFeB demand in 2021-2025 is expected to reach 40%. The expansion of the installed scale of wind power and the increase of the permeability of permanent magnet direct drive will also significantly boost the demand. We predict that the demand for neodymium, iron and boron from 2021 to 2025 will reach more than 30% CAGR. In addition, application fields such as industrial motors and energy-saving elevators will also boost the growth of rare earth demand.
Before 2021, China’s rare earth applications are mainly in low-end and medium-end fields, with steady growth in demand, and the changes in rare earth prices are mostly dominated by the supply side. After 2021, the scale of downstream applications represented by permanent magnet motors has expanded rapidly, and the value center of rare earth has improved. At present, under the background of domestic total amount control and limited overseas increment, with the further opening of high-end demand space, we expect that the global rare earth shortage pattern will continue in the next 2-3 years, and the rare earth value is expected to maintain a high level in the long term.