The price of rare earth concentrate has risen for three consecutive quarters. Industry insiders: The market for light and heavy rare earths may diverge. The first batch of rare earth quotas has become a "barometer."

Amid tariff uncertainties and export controls on medium-heavy rare earth, the Q2 rare earth concentrate prices for Bao Gang United Steel (600010.SH) and China Northern Rare Earth (600111.SH) have been announced.

This evening, both companies disclosed plans to adjust the Q2 2025 rare earth concentrate related-party transaction price to 18,825 yuan/mt (dry weight, REO=50%), with the price increasing or decreasing by 376.5 yuan/mt for every 1% change in REO.

According to the announcement, in Q1 this year, the related-party transaction price for rare earth concentrate was adjusted to 18,618 yuan/mt. Based on this, the Q2 price increased by 207 yuan/mt, up 1.11% QoQ.

This marks the second time this year that the two companies have raised the related-party transaction price for rare earth concentrate. Thus, the H1 rare earth concentrate related-party transaction prices concluded with consecutive increases. Notably, since Q4 2024, the related-party transaction prices for rare earth concentrate at China Northern Rare Earth and Bao Gang United Steel have been continuously raised, but the rate of increase has been narrowing.

On a YoY basis, compared to the Q2 2024 rare earth concentrate price of 16,792 yuan/mt, the Q2 2025 price increased by 2,033 yuan/mt, up 12.11% YoY.

Industry insiders told Caixin that the related-party transaction prices for rare earth concentrate at Bao Gang United Steel and China Northern Rare Earth are referenced against the market prices of rare earth products from the previous quarter. The slight increase in the Q2 rare earth concentrate related-party transaction price indicates a rise in the cost of Pr-Nd oxide for China Northern Rare Earth in Q2, while also providing some support for the Q2 Pr-Nd oxide prices.

It is worth noting that in Q1 this year, driven by upstream raw material supply tightening and downstream consumption stimulus policies, the overall activity in the rare earth market was better than the same period last year, with prices of major rare earth products, represented by Pr-Nd products, showing an upward trend. Under these circumstances, China Northern Rare Earth is expected to achieve a net profit of 425 million to 435 million yuan in Q1 2025, up 716.49% to 735.7% YoY.

Looking ahead, industry analysts generally believe that, influenced by tariff trade wars and export controls on medium-heavy rare earth, the Q2 prices of light rare earth (Pr-Nd oxide) may experience a slight decline, while medium-heavy rare earth prices may rise, but the upward space is expected to be limited.

Caixin noted that the first batch of rare earth quotas for 2024 was issued on the evening of February 6 last year. In comparison, this year's first batch of rare earth quotas is already two months later.

A rare earth industry review report released by China Merchants Securities on April 9 stated that the future price center for domestic and overseas rare earth will shift upward. In the short term, overseas rare earth prices are expected to be higher than domestic prices, with a convergence expected in the medium term, and the overall price center will continue to rise. "We expect that under export controls, the short-term market price of Pr-Nd oxide may reach 600,000 yuan/mt (domestic) and 800,000 yuan/mt (international), with the long-term price center expected to continue to rise."