Highlights
- Chinese rare earth sector experienced a dramatic recovery in Q1 2025.
- Top producers like China Northern Rare Earth reported a massive 727% year-over-year net profit surge.
- Stock prices for rare earth and permanent magnet companies soared, with some hitting daily trading limits.
- Indexes rose over 4.45%.
- Emerging markets in AI, robotics, defense, and clean tech are driving strategic demand.
- Potential supply constraints from US trade tensions and regional geopolitical challenges create investment opportunities.
China’s rare earth sector roared back to life in Q1 2025, driven by soaring spot prices, a post-holiday equities rally in the permanent magnet segment, and record-breaking financials from top producers including China Northern Rare Earth, China Rare Earth Holdings, and Shenghe Resources. Privately held and China-owned Shanghai Metals Market (opens in a new tab) (SMM) reports that this momentum has reverberated across both raw material pricing and stock performance, signaling a high-confidence cycle amid tightening global supply and surging downstream applications.
Several major Chinese rare earth stocks hit their daily trading limits on May 6—among them Shenghe Resources, Jingyuntong, and Tianhe Magnetic Material—while Jiuling Technology surged nearly 25%. Permanent magnet players such as Xici Technology and Earth-Panda rose more than 10%, with Longi Magnet and Galaxy Magnets rounding out the top gainers. SMM’s index of rare earth permanent magnet concept stocks was up 4.45% as of midday.
Q1 Financial Highlights—Profits On the Rise
- China Northern Rare Earth, the nation’s largest producer, posted a 727% year-over-year surge in Q1 net profit, fueled by sharp increases in both sales volume and spot pricing for rare earth oxides, salts, and metals. Operating revenue rose to ¥9.29 billion, up 61.2% YoY. The company also saw a 371% increase in operating cash flow.
- China Rare Earth Holdings turned profitable in Q1 after a dismal 2024, with revenue up 141.3% YoY and a net profit of ¥72.6 million. The firm credited improved pricing and a revamped sales strategy.
- Grinm Advanced Materials reported a staggering 14,698% YoY increase in net profit, driven primarily by its rare earth-focused subsidiaries.
The financial recovery is closely linked to a sharp Q1 rally in PrNd oxide prices, which rose 11.68% quarter-over-quarter and 12.57% year-over-year, reaching an average of ¥429,605 per metric ton. Rare earth carbonate prices similarly climbed more than 12% year over year.
Stabilization with Upside Risk—A Look at Market Dynamics
SMM reports that rare earth prices remain broadly stable but elevated following the Labor Day holiday. PrNd oxide held between ¥411,000–413,000/mt, while dysprosium, terbium, and gadolinium oxides retained their high levels. PrNd alloy prices climbed to ¥501,000–505,000/mt.
Despite stability, analysts and traders describe a wait-and-see sentiment, particularly for medium-heavy rare earths, as demand from magnetic material producers remains subdued. However, light rare earths have retained their pricing power due to robust pre-holiday restocking and demand from clean tech, defense, and robotics sectors.
Supply Squeeze Looms
In a critical disclosure at its recent earnings call, China Northern Rare Earth confirmed a major reduction in rare earth ore imports for 2025. Imports of U.S.-origin rare earth concentrate—historically key to Chinese refining—are expected to stall amid escalating trade friction, particularly under U.S. tariff and export control pressure.
China Securities estimates that in 2024, 133,000 metric tons of rare earths, including 55,600 mt of metal ores, were imported into China, nearly all from the U.S. Any disruption to these flows could exacerbate domestic supply constraints, especially for PrNd oxide.
Simultaneously, Southeast Asian supply—largely from Myanmar, Laos, and Malaysia—is threatened by environmental and geopolitical tightening. Analysts predict dual-control mechanisms in China will further restrict domestic production and export quotas to preserve strategic reserves.
Rare Earths Poised for Revaluation
TF Securities highlights 2025 as a structural inflection point: rare earths are now central to the rise of humanoid robotics, AI hardware, defense platforms, and next-gen electrification. The firm argues that equity valuations have yet to catch up to pricing fundamentals, presenting an asymmetric investment opportunity.
With permanent magnets at the heart of this growth, the convergence of fundamentals and sentiment is driving renewed capital inflows. The strategic value of rare earths—coupled with regulatory tailwinds, foreign investment barriers, and emerging military applications—reinforces the sector’s dual nature: defensive in supply and offensive in returns.
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