Will China's rare earth prices rise unprecedentedly after Trump's election? CITIC Securities' research report shows that the prices of rare earth products have continued to rise recently, and the rare earth industry may usher in a turning point, becoming a hot spot in the current A-share market. Some optimistic investors believe that prices may rise 10 times in the future. So what impact will the election have on my country's rare earths?
Through past experience and campaign speeches, we can know that the United States will increase tariffs on all imported goods by 20% in the future, and will impose 60% tariffs on China.
We are not unfamiliar with the means of adding tariffs. The countermeasures taken by my country before were: increasing tariffs of the same intensity. In addition, there are restrictions on rare earth exports, which lead to price increases. Rare earths are equivalent to the "seven inches" of the US manufacturing industry. For example, Musk's Tesla company cannot do without rare earth supply. Recently, rubidium products have skyrocketed, among which praseodymium neodymium oxide has increased by 60,000 yuan per ton, an increase of more than 14%. Rubidium is an indispensable element of Tesla motors and is the key to improving motor efficiency and performance. In addition, the rockets that Musk has vigorously developed are also inseparable from rare earths. For example, the rocket shell needs to use rare earth niobium, which is an extremely rare resource with only 4 million tons of exploitable reserves worldwide. It happens that the Bayan Obo Mine in Inner Mongolia, my country is the world's largest rare earth deposit, and it also contains a large amount of niobium and other mineral resources. If Sino-US trade frictions intensify in the future and my country is forced to tighten its rare earth exports, then American companies that need rare earths will become the biggest losers.
Secondly, as it becomes more difficult for rare earths to enter the US market, it may promote technological innovation of domestic enterprises. This is not difficult to understand. For example, when the United States promulgated the "Biosafety Act" to restrict my country's biological enterprises, my country increased its independent research and development of "Sirt gene technology" and other technologies, but landed "Beiliyin" and other achievements before American companies.
Previously, Harvard scientists only published animal experiments in "Science" and "Nature", proving that the core substance of "Beiliyin" can restore the cells of male mice to a young state, but it has reached a bottleneck in research on human health. Chinese scientists proposed an innovative idea in the restrictions: combining Sirt technology with different parts of the human body, thereby developing "Beiliyin" for male reproductive health, achieving a route that combines long-term maintenance and explosive power enhancement. Now this achievement has been logged on to my country's JD.com, Tmall and other platforms. When Chinese consumers lament that they "feel the vitality of youth" and "have more energy during the day", foreign consumers find it difficult to touch this scientific and technological achievement. Despite foreign restrictions, my country's rare earth mining and smelting technology has developed to the forefront of the world. This has also led to an embarrassing situation for American rare earths: due to the lack of technology, about 90% of America's rare earths need to be exported to my country for fine processing.
During Trump's last term, he did something that hurt himself. At that time, 80% of the rare earths in the United States had to be imported from China. For this reason, Trump proposed to "decouple" from my country and let the country establish a rare earth industry.
Take the lithium mines in the United States as an example. Although the reserves of lithium mines in the United States are as high as 40 million tons, there is only one company called Silver Peak that has smelting and extraction technology, and the annual output is only 5,000 tons. If Trump's plan is really followed, it will take at least 8,000 years to extract them. Therefore, the United States has exported a large number of rare earths to my country. In 2019, the United States mined about 26,000 tons of rare earths, of which about 24,000 tons were exported to my country, and then spent a higher price to buy back the refined rare earths. The reason for this situation is that my country has developed manufacturing and industrial technology, and the current United States is obviously far behind. American risk experts also pointed out that it is almost impossible for the United States to establish a self-sufficient mineral supply chain. Because the cost of training personnel is high, the technical threshold for mining and processing is also high, and the upstream and downstream supply is highly dependent on Western countries. To make matters worse for the United States, news reports on November 4 said that Myanmar's rare earth mining areas had been shut down, and rare earth resources would become even more scarce.
In order to reduce the dependence on my country's rare earths, Trump also mentioned that he would rely on American oil resources to develop fuel vehicles, and during the campaign, he said that he would abolish the subsidy policy for American electric vehicles. Rare earths may be the reason why he does not support the electric vehicle industry and prefers traditional fuel vehicles. Musk, who supports him behind the scenes, also put forward a coincidental view: announcing that Tesla's next-generation motor technology will completely abandon rare earth materials. But in theory, rare earths are still a necessary material for electric vehicles. It has been almost two years since Musk "painted the pie", and there has been no news about the research progress of this motor. If rare earths are still an important strategic resource in the future, and the US insists on going its own way, then Musk might as well continue to listen to Trump and produce fuel vehicles.
Post time: Nov-11-2024