Following China's Ministry of Commerce recent tightening of rare earth-related export permits, two major domestic rare earth giants, Northern Rare Earth and Baotou Steel, announced price increases on the evening of October 10. Institutions generally believe that under the tight supply-demand balance, rare earth product prices are expected to maintain high-level operations, and the valuation logic for companies is transitioning from traditional cyclical stocks to a dual-drive model of "strategic resources + high-end manufacturing."

Northern Rare Earth announced that based on the rare earth concentrate pricing method and the calculation of rare earth oxide prices for Q3 2025, and approved by the company's 15th general manager's office meeting in 2025, the Q4 2025 rare earth concentrate trading price has been adjusted to 26,205 yuan/ton (excluding tax, dry weight, REO=50%). For every 1% increase or decrease in REO, the price excluding tax increases or decreases by 524.10 yuan/ton.

Baotou Steel also announced on the same day that the company plans to adjust the Q4 2025 rare earth concentrate related transaction price to 26,205 yuan/ton (excluding tax, dry weight, REO=50%). According to calculations, compared to Q3 prices, the adjusted Q4 rare earth concentrate trading price represents an increase of 37.13%, marking the fifth consecutive quarter of price increases by both parties.

SMM pricing shows that on September 30 this year, the average price of praseodymium-neodymium oxide was 562,000 yuan/ton, representing a 26.43% increase compared to the average price of 444,500 yuan/ton on June 30.

Industry analysts indicate that the Q4 rare earth concentrate related transaction price adjustment by Baotou Steel and Northern Rare Earth primarily references Q3 rare earth oxide market prices this year. Due to the significant price surge in praseodymium-neodymium oxide during Q3, the current rare earth concentrate related transaction price increase appears quite "dramatic."

Over the past year, Northern Rare Earth's rare earth concentrate related transaction price has continuously increased from 16,741 yuan/ton in Q3 2024 to 26,205 yuan/ton after the current price adjustment, representing an interval increase of 56.53%.

Analysis suggests that the continuous rise in rare earth concentrate prices may be related to tightening upstream raw material supply. China has strengthened rare earth export controls since April, and the Ministry of Commerce further expanded control scope over related offshore items on October 9, directly limiting illegal transfer channels and tightening market circulation.

From the demand side, Guangsheng Nonferrous noted in its interim report that entering July, with improving market demand and overseas high-price orders returning, praseodymium-neodymium oxide prices showed a strong rebound trend, with industry prosperity gradually improving.

Northern Rare Earth stated during institutional research in September this year that in recent years, under the backdrop of green, low-carbon development and "electrification of everything," magnetic material demand growth is around 10%, and this trend is expected to continue in 2025. The rapid development of wind power, new energy vehicles, humanoid robots, low-altitude economy, and other emerging fields provides strong support for downstream demand growth.

Rising rare earth concentrate prices have driven significant growth in related companies' revenue and profits. Northern Rare Earth expects Q1-Q3 net profit attributable to listed company shareholders of 1.51-1.57 billion yuan, representing a year-on-year increase of 272.54% to 287.34%. Non-recurring net profit is expected to reach 1.33-1.39 billion yuan, representing a year-on-year increase of 399.90% to 422.46%.

Baotou Steel achieved revenue of 31.329 billion yuan in the first half of this year, with net profit attributable to listed company shareholders of 151 million yuan, up 39.99% year-on-year.

China Merchants Securities stated that rare earth industry chain control has been upgraded again, comprehensively expanding control scope both horizontally and vertically. The strategic position of the rare earth industry chain has been elevated, helping to improve valuations of listed companies in the industry chain. With Q3 rare earth prices surging significantly, Q3 and Q4 profits for rare earth and magnetic material companies are expected to improve markedly. The firm continues to be bullish on rare earth prices and focuses on investment opportunities from dual EPS and PE improvements. Recommended focus includes upstream resource companies such as Northern Rare Earth, Guangsheng Nonferrous, China Rare Earth, Baotou Steel, and Shenghe Resources, as well as magnetic material companies like JLMAG, Zhenghai Magnetic Materials, and Ningbo Yunsheng.

Related Concept Stocks:

JLMAG (06680): JLMAG announced that the group expects Q1-Q3 2025 (January-September 2025) net profit attributable to listed company shareholders of 505-550 million yuan, representing a year-on-year increase of 157%-179%. Q3 net profit attributable to listed company shareholders is expected to be 200-245 million yuan, up 159-217% year-on-year.

CHINA RAREEARTH (00769): According to public information, China Rare Earth is now known as China Rare Earth Holdings Limited, formerly Yixing New Way Holdings Limited. The company is primarily engaged in manufacturing and sales of rare earth and refractory products. The rare earth segment engages in manufacturing and sales of rare earth products, including metal oxides and fluorescent products such as lamp phosphors, yttrium oxide, and yttrium europium oxide.

MMG (01208): The company achieved revenue of $2.817 billion in the first half, up 47% year-on-year. Profit attributable to equity holders reached $340 million, up 1,511% year-on-year. China Minmetals' subsidiary Hunan Xikuangshan Flashstar Antimony Industry's wholly-controlled Xikuangshan owns over 300,000 tons of antimony ore resources.