On November 1st, the A-share market opened sluggishly, but the rare earth permanent magnet sector defied the trend and strengthened, with nearly 20 related stocks hitting the limit. News of a temporary halt in rare earth mining in Myanmar provided a direct boost to the sector's rise. Market data shows that cyclical stocks rose overall, driving the Shanghai Composite and Shenzhen Component indices into positive territory during the session.
It is reported that on October 23, the Kachin Independent Army of Myanmar announced that it had fully controlled the country's rare earth mining areas, leading to a halt in local mining and resulting in border closures, temporarily preventing Myanmar's rare earths from entering China. Myanmar is the third-largest source of rare earth raw materials in the world, primarily light and heavy rare earths. The disruption of its exports has further exacerbated the global supply tightness. Data shows that from January to September this year, China imported 31,000 tons of rare earth oxides from Myanmar, accounting for nearly 75% of the total rare earth oxide imports during the same period, a year-on-year decrease of 3%.
In addition, with the US elections approaching, expectations for overseas tariff increases are rising. If overseas markets preemptively stockpile in the fourth quarter to address potential trade frictions, it will further strengthen rare earth demand. A supply-demand mismatch has notably improved investor sentiment in the rare earth permanent magnet sector, making it a market focal point.
In terms of industry performance, the domestic rare earth industry saw remarkable profitability in the first three quarters of 2024. Data shows that the combined operating revenue of 11 listed companies involved in rare earths reached 56.556 billion yuan, with net profits of 1.93 billion yuan, of which nine companies were profitable. With the dual drivers of disrupted Myanmar supply and increased overseas demand, the market holds an optimistic outlook for the rare earth permanent magnet sector's demand prospects, with many stocks in the sector experiencing a strong limit-up.
