CITIC Construction Investment: The strategic value of rare earths is highlighted, and it is recommended to grasp the bottom of the cycle and the resonance allocation window for long-term growth

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that under the global energy transition and the wave of new quality productivity, lithium, cobalt, nickel, and rare earths are the underlying strategic cornerstones of the new energy industry. In the short term, supply flexibility for lithium, nickel, etc. has been restored, putting pressure on prices; however, from a long-term perspective, global resource nationalism is heating up, upstream new supply capital expenditure is limited, the ceiling for expanding production on the resource side is clear, and long-term supply flexibility is insufficient. The demand side is showing structural differentiation: the growth rate of domestic new energy vehicles is slowing down, the energy storage industry is on the eve of the explosion. Emerging applications such as robotics and the low-altitude economy are opening up long-term incremental space, and short-term phased excess is not changing the main line of long-term industrial prosperity. The geographical concentration of lithium, cobalt, and nickel rare earth resources is a core proposition. Resource endowments and the ability to integrate the entire industry chain build leading core barriers, and it is recommended to grasp the allocation window that resonates with the bottom of the cycle and long-term growth.

CITIC Construction Investment's main views are as follows:

Lithium: supply elasticity returns, price center moves downward

Stimulated by the rise in lithium prices, production in several major production regions exceeded expectations or guidelines in 2026, while overseas discontinued mines resumed production and capital expenditure recovered, giving future supply flexibility. Supply disruptions caused by the 2026 policy will weaken in 2027, African lithium mines will resume elasticity, and Jiangxi mica will resume growth; in the future, the Sichuan lithium mine will be the region with the biggest increase in production, and it will be released centrally after 2028. On the demand side, the growth rate of domestic demand for new energy vehicles has slowed, and exports will continue to grow at a double-digit rate in the future. Energy storage batteries are in the early stages of the industrial explosion. As their share in total consumption increases, their impact on overall consumption is increasing. It is estimated that in 2026-2028, a shortage of 71,000 tons of lithium will shift from a shortage of 71,000 tons to an excess of 66,000 tons and 148,000 tons.

Nickel: Indonesia's policy restrictions reshape supply elasticity, and supply and demand shift to a tight balance to establish a firm price bottom

Indonesia controls 66.7% of global mine production and has contributed to the total net increase over the past 15 years. The RKAB quota has become a core supply-side variable: the Indonesian Ministry of Energy and Mining has stated that the 2027 quota will fall below 29-3 million tons. Coupled with the accelerated clearance of high-cost production capacity from non-Indonesia, the global primary nickel is expected to change from an excess of 283,000 tons the previous year to a slight shortage of 32,000 tons in 2026, ending four consecutive years of surplus. The double-track cost of the industry is obvious, and the marginal cost of external mining is rising, supporting the mid-term center of 17,000 US dollars/ton; the upward trend still requires the implementation of quotas, continued inventory removal, and improvements in demand for stainless steel and batteries.

Rare earths: strategic resource value reshaping, overseas shortages and domestic and foreign price differences widen

Rare earths have both supply rigidity and downstream irreplaceable nature. They have outstanding scarcity properties, and the country has the advantage of the entire industry chain. After export controls were implemented, the overseas supply gap became apparent. Domestic and foreign price differences continued to widen, and the price difference for some elements could reach 200 times. The scarce pricing logic is expected to strengthen after overseas inventories bottom out. On the demand side, rare earth elements benefit from rapid growth in fields such as new energy vehicles, energy-saving motors, wind power generation, etc. The demand for high-performance NdFeB magnets is expected to reach 194,000 tons in 2028, with an average compound annual growth rate of 13.3%.

risk analysis

1. The global economy has declined sharply, and consumption has shrunk in a cliff-style manner. 2. US inflation got out of control, the Fed's monetary tightening exceeded expectations, and a strong dollar suppressed the price of equity assets. The US is unable to effectively control inflation and continues to raise interest rates. 3. Consumption growth in the domestic new energy sector fell short of expectations, and consumption in the real estate sector continued to be sluggish.