In recent months, while the prices of metals like zinc, lead, and molybdenum have surged rapidly, rare earth elements—still part of the non-ferrous metal sector—have struggled to maintain their value. This trend was further exacerbated in March when China lost a key WTO arbitration case regarding its export restrictions on rare earths, leading to market expectations of a significant price drop. However, since July, both at the national and corporate levels, support for the rare earth industry has intensified, signaling a potential recovery in the second half of the year.
On July 9, the Ministry of Industry and Information Technology and the Ministry of Finance jointly released the “Administrative Measures for the National IoT Development and Rare Earth Industry Subsidy Funds.†The policy includes one-time subsidies for approved production capacity, with rates set at 1,000 RMB per ton for mining, 1,500 RMB per ton for smelting and separation, and 500 RMB per ton for metal smelting. These incentives are particularly beneficial for large-scale, environmentally compliant rare earth producers. For example, Baotou Rare Earth could receive up to 100 million RMB in subsidies under this framework.
As export quotas and tariffs are gradually phased out, the government is expected to clear existing social inventories, which could provide a strong boost to the domestic rare earth market. Although the 2013 purchase and storage policy has yet to be officially announced after several rounds of discussions, it remains a key factor that could drive rare earth prices upward in the second half of the year. Analyst reports suggest that if the 2013 stockpiling program involves between 10 billion and 20 billion yuan, it could help reduce speculative hoarding and stabilize prices.
Meanwhile, national support policies have accelerated the consolidation of rare earth enterprises. On July 9, Xiamen Tungsten announced that its Rare Earth Group had been approved by both the provincial government and the Ministry of Industry and Information Technology, marking the start of its implementation. Additionally, China Rare Earth Co., Ltd.—part of China Aluminum Corporation—signed an agreement with the Shandong Economic and Information Technology Commission and the China Steel Research Group to establish the “Shandong Rare Earth Group.†Earlier this year, the State Council proposed the integration of six major rare earth groups, and progress has been made this month. The formation of these larger entities is expected to strengthen price control in the future.
Among listed A-share companies, Weihua Group, Guangsheng Nonferrous Metals, and Xiamen Tungsten are among the six major rare earth groups approved by the State Council, benefiting from local resource integration. Moreover, with the recovery of traditional wind power demand and increased demand for variable frequency air conditioners, automotive electronics, and robotics, companies like Ningbo Yunsheng, which produce high-end NdFeB magnets, are likely to see early gains.
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