Zhi Tong Cai Jing·2025-10-13 01:23Core Viewpoint - The Chinese Ministry of Commerce has tightened export licenses for rare earths, leading to price increases announced by major domestic rare earth companies. The supply-demand balance suggests that rare earth product prices are likely to remain high, shifting the valuation logic of companies from traditional cyclical stocks to a dual-driven model of "strategic resources + high-end manufacturing" [1]. Price Adjustments - Northern Rare Earth and Baotou Steel announced an adjustment of the rare earth concentrate trading price to 26,205 yuan/ton (excluding tax) for Q4 2025, marking a 37.13% increase from Q3 prices. This is the fifth consecutive quarter of price increases for both companies [1]. - The average price of praseodymium-neodymium oxide rose to 562,000 yuan/ton as of September 30, 2023, a 26.43% increase from 444,500 yuan/ton on June 30, 2023. The price adjustments are primarily based on the significant rise in rare earth oxide prices during Q3 [2]. Supply Chain Dynamics - The continuous increase in rare earth concentrate prices is linked to tightening upstream raw material supplies. Since April, China has strengthened export controls on rare earths, further limiting illegal transfer channels and tightening market circulation [2]. - The demand for rare earths is expected to grow, driven by developments in green technology and electric-driven applications, with a projected 10% increase in magnetic material demand [3]. Financial Performance - Northern Rare Earth anticipates a net profit of 1.51 to 1.57 billion yuan for the first three quarters of 2023, representing a year-on-year increase of 272.54% to 287.34%. The non-recurring net profit is expected to be 1.33 to 1.39 billion yuan, reflecting a growth of 399.90% to 422.46% [3]. - Baotou Steel reported a revenue of 31.329 billion yuan in the first half of 2023, with a net profit of 151 million yuan, marking a year-on-year increase of 39.99% [3]. Industry Outlook - The tightening of controls in the rare earth industry is expected to enhance the strategic position of the industry chain, leading to improved valuations for listed companies. Analysts predict significant profit improvements for rare earth and magnetic material companies in Q3 and Q4 [4]. - Investment opportunities are anticipated due to the dual enhancement of earnings per share (EPS) and price-to-earnings (PE) ratios, with a focus on upstream resource companies like Northern Rare Earth and Guangxi Chicheng [4].