Rare Earths Riding the Wave: Strategic Upgrade of National Heavy Weaponry, Enhanced Controls Expand Supply-Demand Gap

The rare earth industry has generally moved past its former boom-and-bust, rough cycle phase and is transforming into a “high-quality, tight balance, and high-premium” development stage dominated by the national core strategic monopoly.

On the supply side, the latest “Total Volume Control Measures” have thoroughly ended the uncertainty of implicit supply, with domestic quota growth long suppressed at around 5%; overseas supply chain supplementation remains more show than substance, with multiple bottlenecks such as cost, technology, and environmental protection, making it unlikely to see significant actual increases by 2026; meanwhile, Myanmar’s geopolitical “black swan” event further locks in the lower limit of medium and heavy rare earth supply.

On the demand side, high oil prices are accelerating the transition of traditional transportation vehicles to new energy PMSM motors. Combined with the long-term potential of embodied robots, the supply-demand gap will widen year by year. Rare earths are currently at a historical juncture where the strategic resource premium is being revalued by global core capital.