Highlights

• China Northern Rare Earth Group increases ore prices by 1.5%, marking the fourth consecutive quarterly price hike.
• The company expects Q2 net profit of CNY 900-960 million, representing nearly 20x year-over-year growth.
• Price increase reflects tightening domestic raw material supply and sustained demand in government-backed tech sectors.

In a move signaling renewed pricing power in China’s rare earth sector, China Northern Rare Earth Group High-Tech Co. [SHA: 600111], the country’s top rare earth supplier, announced it will raise ore prices for sister company Baotou Steel Union [SHA: 600010]—sending both companies’ shares up 10% to their daily trading limits on July 11.

Starting this month, reports Guo Jiying at Yicai Global (opens in a new tab), Baotou Steel will pay CNY19,109 ($2,666) per ton for ore containing 50% rare earth oxides (REO)—a 1.5% increase over last month. Pricing also adjusts upward for richer concentrates, with a CNY382 ($53) per ton bump per additional 1% REO. This marks the fourth consecutive quarterly price hike, totaling a 14% rise since Q3 2024, under a Baogang Group mechanism that recalibrates prices each quarter based on market averages.

The price increase reflects a tightening of China’s domestic raw material supply and sustained demand, fueled by government-backed sectors such as EVs, electronics, wind power, and inverter air conditioners. According to Yicai’s reporting, Northern Rare Earth expects a second-quarter net profit of CNY900–960 million ($126–134 million)—nearly 20x year-over-year growth.

The news comes amid heightened investor focus on China’s dominance in rare earth processing and pricing power. Citic Securities (opens in a new tab) forecasts that while near-term demand will remain driven by clean tech, longer-term upside could come from robotics, eVTOL aircraft, and industrial automation.

What Investors Should Watch

• Transparency & Transfer Pricing: Both Northern Rare Earth and Baotou Steel are subsidiaries of state-owned Baogang Group. How transparent are these internal price-setting mechanisms? Could this create distortions for independent players in China or abroad?
• Export Pricing Signals: Will similar pricing pressures spill into China's export contracts, impacting global downstream manufacturers and non-Chinese buyers?
• Subsidy & Profit Cycle Risks: A 20x profit increase sounds bullish—but is it sustainable, or riding a temporary policy wave? Will profits normalize if demand flattens or inventories catch up?
• Policy Leverage: If the Trump administration seeks to counter China’s pricing power, how will U.S. rare earth producers respond—and can they match the vertical integration that Baogang now exploits?

Conclusion

The price hike highlights China’s continued leverage in global rare earth markets—but also raises key questions about fairness, transparency, and future volatility. Retail investors should track how China’s internal pricing trends ripple outward, and what they signal for the global supply chain.