Rare Metals: The Strategic Revival
After years of subdued performance, the rare metals sector has recently seen a significant upswing. As of July 28, 2025, the CSI Rare Metals Index (930632), tracked by the Rare Metals ETF Fund (561800), reached a year-to-date high gain of 35.12%. The renewed market focus on this sector is primarily driven by structural changes on the supply side against a backdrop of sustained demand growth, which has pushed prices for many rare metal varieties towards recovery.
Rare metals, often termed "the lifeblood of the new economy," are metallic resources found in small quantities in nature with low application volumes but extremely high strategic value. They are widely used in critical fields such as new energy, defense, high-end equipment, aerospace, and semiconductors. China holds a pivotal position in the global rare metals supply chain, and in recent years, against a backdrop of increasing geopolitical uncertainty, has gradually strengthened export controls on certain rare metal varieties.
Taking rare earth elements—a heavyweight component—as an example, a clear trend of supply tightening has emerged. Since 2023, China has implemented strict controls over the rare earth industry chain, not only restricting exports of medium and heavy rare earths but also bringing imported rare earth ore products under production quota management. The growth rate of the second batch of rare earth mining and smelting separation quotas for 2024 has already slowed, and the first batch of quotas for 2025 have not yet been issued, reflecting a continuous policy direction towards tightening supply.
On the demand side, key downstream application areas for rare earths, such as new energy vehicles and wind power, maintain steady growth. Simultaneously, the rapid development of emerging industries like humanoid robots and the low-altitude economy further expands the potential for rare earth demand. Driven by this ongoing optimization of the supply-demand structure, rare earth prices have risen significantly. The average price of praseodymium-neodymium oxide increased from 412,000 RMB/ton in late April 2025 to 531,000 RMB/ton, leading to a marginal improvement in the earnings of related listed companies.
In summary, the revival of the rare metals sector is essentially a value revaluation driven by the combined effect of three factors: elevated strategic resource importance,continuously restricted supply, and robust demand growth.
|
Subdivision of Rare Metals |
Index Weight |
Application Fields |
|
Li |
32.68% |
Power batteries, energy storage, consumer electronics |
|
Rare Earths |
30.70% |
New energy vehicles, wind power, military and aerospace |
|
Co |
6.80% |
Power batteries, aircraft engines |
|
Mo |
9.41% |
Special steel, stainless steel |
|
Ti |
6.92% |
Titanium dioxide, titanium materials |
|
In |
4.94% |
ITO targets, LCD displays, touch screens |
|
W |
4.79% |
Cutting tools, rocket engines |
|
Ge |
1.40% |
Semiconductors, solar cells, fiber optic communications |
|
Zr |
1.68% |
Pipelines, heat exchangers, nuclear reactors |
|
Ta |
0.67% |
Flat panel displays, photovoltaic thin films, semiconductor compounds |
