Several rare earth enterprises reported positive Q1 results, with rare earth permanent magnets concept stocks performing brilliantly. Shenghe Resources and others hit the daily limit. [[SMM Flash News]]

SMM May 6 News:

The significant price increase of rare earth spot cargo in Q1 drove positive Q1 performance for several rare earth enterprises, including China Northern Rare Earth and China Rare Earth. The rare earth permanent magnets concept sector performed remarkably after the Labour Day holiday. As of 10:53 on May 6, the rare earth permanent magnets concept sector rose by 4.45%. Among individual stocks, Jingyuntong, Shenghe Resources, and Tianhe Magnetic Material hit the daily limit, while Jiuling Technology surged nearly 25%. Xici Technology, Earth-Panda Advanced Magnetic Material rose over 10%, and GSHC, Longji Technology, and Galaxy Magnets were among the top gainers.

News Updates

[Grinm Advanced Materials: Q1 net profit up 14,698% YoY] Grinm Advanced Materials announced that it achieved operating revenue of 1.84 billion yuan in Q1, down 18.67% YoY. Net profit attributable to shareholders of listed companies was 67.3847 million yuan, up 14,698.12% YoY. The main reason was the increase in net profit of its subsidiary Grinm Yijin and holding subsidiary Grinm Rare Earth.

[China Northern Rare Earth: Q1 net profit up 727% YoY, driven by higher sales volume and prices of major rare earth products] China Northern Rare Earth announced that the company achieved operating revenue of 9.287 billion yuan in Q1, up 61.19% YoY. Net profit attributable to shareholders of listed companies was 431 million yuan, up 727.3% YoY. The main reason was the year-on-year increase in the average price of the company's major rare earth products in Q1, leading to a year-on-year increase in gross profit. Meanwhile, the net cash flow generated from the company's operating activities was 410 million yuan, up 371.14% YoY. In addition, the production and sales volumes of rare earth oxides, rare earth salts, rare earth metals, and magnetic materials all increased in Q1.

[China Rare Earth: Prices of some rare earth market products rebound, Q1 net profit turns profitable YoY] China Rare Earth disclosed its 2025 Q1 report on April 28, showing that the company achieved total operating revenue of 728 million yuan, up 141.32% YoY. Net profit attributable to the parent company was 72.6181 million yuan, turning profitable YoY. Net profit excluding extraordinary items was 66.224 million yuan, also turning profitable YoY. The net cash flow generated from operating activities was -119 million yuan, compared to -504 million yuan in the same period last year. During the reporting period, China Rare Earth's basic earnings per share was 0.0684 yuan, and the weighted average return on net assets was 1.55%. Regarding the reasons for the increase in operating revenue, China Rare Earth stated that it was mainly due to the rebound in prices of some rare earth market products, and the company adjusted its sales strategy, leading to an increase in operating revenue.

Rare earth prices rose significantly in Q1, with Pr-Nd oxide rising slightly on May 6

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On May 6, the first trading day after the Labour Day holiday, rare earth market prices showed an overall trend of stabilization. Specifically, in the oxide market, the price of Pr-Nd oxide increased to 411,000-413,000 yuan/mt, dysprosium oxide remained stable at 1.59-1.61 million yuan/mt, terbium oxide remained stable at 6.72-6.75 million yuan/mt, and gadolinium oxide remained stable at 160,000-164,000 yuan/mt. Holmium oxide remained stable at 490,000-495,000 yuan/mt, while erbium oxide fluctuated between 298,000-303,000 yuan/mt. In the metal market, the price of Pr-Nd alloy increased to 501,000-505,000 yuan/mt, dysprosium-iron alloy remained stable at 1.57-1.58 million yuan/mt, and terbium metal remained stable at 8.35-8.4 million yuan/mt.

The price increase of rare earth products such as Pr-Nd oxide in Q1 improved the operating performance of many rare earth enterprises.

Reviewing the price trend of SMM Pr-Nd oxide in Q1, it can be seen that the average price of Pr-Nd oxide on March 31 this year was 444,500 yuan/mt, up 46,500 yuan/mt from the average price of 398,000 yuan/mt on December 31, 2024, with a Q1 increase of 11.68%. Comparing the daily average price of Pr-Nd oxide in Q1 2025 (429,605.26 yuan/mt) with that in Q1 2024 (381,646.55 yuan/mt), it can be seen that the daily average price in Q1 this year increased by 12.57% YoY.

From the price performance of rare earth carbonate in Q1 this year, it can be seen that the average price of rare earth carbonate on March 31 was 35,950 yuan/mt, up 3,340 yuan/mt from the average price of 32,250 yuan/mt on December 31, 2024, with an increase of 10.36%. The daily average price of rare earth carbonate in Q1 this year was 34,792.98 yuan/mt, up 3,825.04 yuan/mt from the daily average price of 30,967.24 yuan/mt in Q1 last year, with a year-on-year increase of 12.35%.

Regarding the outlook for rare earths: Currently, rare earth market prices remain stable overall. After the holiday, the overall trading atmosphere in the market has not changed significantly compared to before the holiday, and there is a strong wait-and-see sentiment in the market. In the light rare earth market, influenced by the pre-holiday restocking peak, the prices of Pr-Nd products have stabilized. In contrast, in the medium-heavy rare earth market, due to the lack of significant improvement in end-use demand, magnetic material enterprises have low restocking demand for medium-heavy rare earths, and the market trading atmosphere is sluggish. It is expected that rare earth market prices will continue to remain stable in the short term.

Voices from Various Parties

[China Northern Rare Earth: Total imports of ore significantly reduced this year, further improving the supply-demand relationship] On April 25, Qu Yedong, General Manager of China Northern Rare Earth, stated at the 2024 Annual Performance and Cash Dividend Briefing that, "In 2025, the total imports of ore will be significantly reduced. At the same time, under the stimulation of a series of national consumption policies, consumption orders in key downstream sectors will continue to be released, further improving the supply-demand relationship. This is expected to have a positive impact on the company's product sales and prices." (Finance News)

China Securities stated that in 2024, China imported 133,000 mt of rare earths, including 77,300 mt of rare earth metal compounds, mainly from Myanmar, Laos, and Malaysia, and 55,600 mt of rare earth metal ore, almost entirely from the US. Baichuan calculated that the actual conversion to Pr-Nd oxide was approximately 4,500 mt. On the supply side, it is expected that US rare earth concentrate exports to China will stall in 2025, and there is a possibility of tightening rare earth supply in Southeast Asia. Domestically, there will be strengthened dual control over rare earth production and exports. On the demand side, 2025 is the first year of significant growth in demand for humanoid robots. The rare earth sector is both offensive and defensive, and it is recommended to continue to pay attention.

TF Securities believes that due to the scarcity and high-end applications of medium-heavy rare earths, export controls will further consolidate China's position in the rare earth industry chain. Currently, it is at a time point where the fundamentals and sentiment of the rare earth sector are in resonance, with the rare earth price center rising, while equity values have not fully reflected this. Investment opportunities in the sector should be valued.