China Northern Rare Earth: Export orders for rare earth products saw some recovery in June. The rare earth market was more active in Q1 than in the same period last year.

The investor relations activity record sheet (morning of June 27, 2025) announced by China Northern Rare Earth on July 8 shows:

Q: Recently, there have been adjustments in the prices of rare earth oxides and metals. How does the company view the current supply and demand situation in the industry?

China Northern Rare Earth introduced: In May this year, with breakthroughs in China-US trade negotiations, the activity level of the rare earth market increased. Prices of mainstream products fluctuated upward, and trading volume expanded. On the supply side, US ore imports remained stagnant, and imports of ore from Myanmar and other sources decreased due to the impact of the rainy season. Separation enterprises maintained stable production, while some metal plants reduced production, leading to an overall tight spot supply in the market. On the demand side, domestic market consumption demand remained stable, with some downstream enterprises obtaining export licenses. Overseas orders recovered slightly, and some major plants successively conducted tenders to replenish inventory, supporting the stabilization of mainstream product prices.

Q: How does the company view the issuance of national total control indicators for rare earths and the future price expectations of rare earth products?

China Northern Rare Earth introduced: This year, the issuance time of national total control indicators for rare earths was delayed compared to previous years. However, from the perspective of the issuance process of total control indicators, this year marks the first issuance of total control indicators after the promulgation of the "Rare Earth Management Regulations". These indicators are basically consistent with the relevant requirements of the "Rare Earth Management Regulations" and the "Interim Measures for the Regulation and Management of Total Control of Rare Earth Mining and Rare Earth Smelting and Separation (Public Consultation Draft)", covering both smelting and separation products produced from domestic ore and imported ore. This batch of total control indicators was also formulated comprehensively considering market conditions, enterprise production, and the supply and demand situation of the rare earth industry.

Since Q1 2025, influenced by policies such as the tightening of upstream raw material supply and the stimulation of downstream consumption, the overall activity level of the rare earth market has been better than that of the same period last year, which has also supported the company's performance in Q1. The company seized favorable market opportunities, centered on the annual production and operation task targets, comprehensively improved the operational efficiency of production lines, continuously optimized raw material and product structures, expanded markets in multiple ways, deepened reforms, and achieved record-high production and sales volumes. After entering April-May, influenced by the international environment, rare earth prices experienced a brief pullback. However, with the gradual clarification of national policies, the attention paid to the rare earth industry also increased, driving up product prices. Currently, the orders of the company's subsidiary, Inner Mongolia Northern Rare Earth Magnetic Materials Co., Ltd., are relatively full, and the company holds an optimistic view on the future price trend of rare earths.

Q: How does the company view the national export control policy for medium-heavy rare earth products? What is the impact on the export volume of rare earth products?Has the company been affected compared to before the implementation of the control policies?

China Northern Rare Earth stated: The company firmly supports and implements various policy measures introduced by the state. The state's export control policy for rare earth products only requires compliant management of rare earth product exports and conducts export control work from the perspective of fulfilling national security protection obligations. Regarding the impact on exports, based on the current understanding, the impact on La-Ce product exports is relatively small, while the exports of seven controlled rare earth element products, including Dy and Tb, have been somewhat affected. Starting from the end of April, some rare earth enterprises have successively applied for export licenses. However, due to the time required for export license processing and customs quality inspection procedures, the export duration of rare earth products has become slightly longer than before. By June, there has been a certain recovery in export order-taking for rare earth products. The company mainly focuses on exporting light rare earth products, and the impact of export controls is relatively small.

Q: How does the company view the changes in the price spread between domestic and overseas markets for rare earth products? And the boosting effect of the recovery of downstream demand on rare earth product prices?

China Northern Rare Earth stated: This year, rare earth product prices have been better than last year. It is not realistic to maintain a long-term price spread between domestic and overseas markets. After going through a certain process, it will gradually recover. Product prices are mainly influenced by the supply-demand relationship. Since the manifestation of demand is relatively lagging, everyone's views on the impact on future prices differ. However, after April-May, influenced by the international environment, rare earth prices experienced a temporary pullback. With the gradual clarification of national policies, the attention paid to the rare earth industry has also risen, driving up product prices. Currently, the orders of the company's subsidiary, Inner Mongolia Northern Rare Earth Magnetic Materials Co., Ltd., are relatively full, and the company holds an optimistic view on the future trend of rare earth prices.

Q: Before the issuance of the national total control quota for rare earths, what principles does the company follow in organizing production?

China Northern Rare Earth stated: Based on the total control quotas for rare earth mining and smelting and separation issued by the state in previous years, the basic principle is to maintain the supply-demand balance in the rare earth industry and promote its healthy development. Before the issuance of the total control quota for rare earths, the company organizes production according to its annual production plan to meet the raw material demand for downstream applications of rare earths.

Q: What is the company's product inventory situation? Is there a risk of impairment provision for La-Ce products in the future?

China Northern Rare Earth stated: Currently, the company's inventory of Pr-Nd rare earth products is at a normal turnover level. The La-Ce rare earth products are in structural surplus, which is a common issue in the industry. To enhance product diversity, increase product types, improve product added value, and digest the inventory and production of La-Ce products, this year, the company has implemented an integrated mechanism for research, production, and sales of new rare earth product varieties, starting with the promotion of specialized products and exploring downstream customer needs. In Q1, the company saw significant increases in the production and sales volumes of single lanthanum, single cerium, and new rare earth products. The production and sales volumes of the company's lanthanum-cerium products are generally reflected in the rare earth oxides and rare earth salts categories within the main operating data. In Q1, the company's rare earth oxide production volume was 5,700 mt, up 33.99% YoY, and sales volume was 10,600 mt, up 57.61% YoY. The production volume of rare earth salts was 37,400 mt, up 1.25% YoY, and sales volume was 32,100 mt, up 52.95% YoY. There is no impairment risk for the company's lanthanum-cerium products in the future.

Q: What is the current demand rhythm of downstream magnetic material, NEV, and wind power customers?

China Northern Rare Earth introduced: Currently, the demand rhythm of downstream magnetic material customers is relatively fast. From January to May, the production and sales of NEVs increased by 45.2% and 44% YoY, respectively, and the sales of new NEVs accounted for 44% of the total new car sales. As of month-end April, the cumulative installed power generation capacity nationwide was 3.49 billion kW, up 15.9% YoY. Among them, the installed wind power capacity was 540 million kW, up 18.2% YoY. Meanwhile, the energy efficiency upgrade of industrial motors will accelerate the replacement of traditional motors with rare earth magnetic materials. Under the trend of miniaturization and lightweighting in emerging applications of consumer electronics and robots, the demand in fields such as smartphones, TWS earphones, and servo motors (industrial robots, humanoid robots) is gradually being released.

Q: What is the company's strategic layout and capacity in magnetic materials?

China Northern Rare Earth introduced: The company currently has a production capacity of 100,000 mt/year for magnetic materials. Its subsidiary, Inner Mongolia Northern Rare Earth Magnetic Materials Co., Ltd., has initiated the construction of a 50,000 mt/year high-performance NdFeB strip casting alloy project. After the project is completed, it will add an annual production capacity of 50,000 mt of magnetic material alloys and 10,000 mt of hydrogen decrepitation powder, creating a rare earth magnetic material alloy (powder) production factory with the largest single capacity, the best comprehensive cost-effectiveness, leading quality, and the most competitive market position.

The company is accelerating technological upgrades. Antai Northern Technology Co., Ltd., a joint venture established with Antai Technology, has completed the construction of a 5,000 mt/year rare earth permanent magnet industrialisation project. In collaboration with Ningbo Zhaobao Magnetism, Suzhou Tongrun Drive, and Ningbo Xici Technology, it has jointly invested in establishing Northern Zhaobao Magnetism (Inner Mongolia) Co., Ltd. to implement a 3,000 mt/year high-performance NdFeB magnetic material project, further meeting the magnetic material demands in fields such as high-end permanent magnet motors, robots, and intelligent equipment.

Q: What are the company's considerations regarding the integration of smelting and separation assets outside the two major rare earth groups?

China Northern Rare Earth introduced: Since the implementation of the "Rare Earth Management Regulations" and related detailed rules, the state has been tightening control over upstream smelting and separation, scrap recycling, and overseas resources. In the future, the company will further strengthen the integration of smelting and separation enterprises, enhance the competitiveness of surviving enterprises, and promote sustainable and high-quality development of the entire industry.

Q: How does the company consider the direction of product structure optimization?

China Northern Rare Earth introduced: The company will continue to promote the extension, supplementation, and strengthening of the industry chain. Through various forms such as self-built projects, upgrades and renovations, and joint ventures and cooperation, it will maintain and enhance its advantageous position in the raw material end of the industry. It will accelerate new product R&D and industry chain extension in functional materials such as magnetic materials and polishing materials, and increase the proportion of high-end and high value-added products. It will also differentiate its layout in industries such as magnets and rare earth end-use applications, continuously strengthen scientific and technological innovation, and actively promote the transformation of scientific and technological achievements in rare earth new materials and new products.

According to the Q1 2025 financial report previously released by China Northern Rare Earth: In Q1, the company achieved operating revenue of 9.287 billion yuan, up 61.19% YoY; net profit attributable to shareholders of publicly listed firms was 431 million yuan, up 727.3% YoY; and net profit attributable to shareholders of publicly listed firms after deducting non-recurring gains and losses was 435 million yuan, up 11,622.98% YoY.

Regarding the reasons for the increase in operating revenue, China Northern Rare Earth stated: In Q1, the average price of the company's main rare earth products, represented by Pr-Nd products, increased YoY, and sales increased YoY. Regarding the reasons for the increase in net profit, China Northern Rare Earth stated: In Q1, the average price of the company's main rare earth products, represented by Pr-Nd products, increased YoY, raw material costs decreased YoY, and gross profit increased YoY.

Reviewing the price trend of SMM Pr-Nd oxide in Q1, we can see that: The average price of Pr-Nd oxide on March 31 this year was 444,500 yuan/mt, compared with the average price of 398,000 yuan/mt on December 31, 2024, an increase of 46,500 yuan/mt, 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 the daily average price in Q1 2024 (381,646.55 yuan/mt), we can see that the daily average price in Q1 this year increased by 12.57% YoY.

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According to SMM quotes, on July 8, the average price of SMM Pr-Nd oxide was 454,000 yuan/mt, up 3,000 yuan/mt from the previous trading day, with an increase of 0.67%. Currently, the rare earth market price is showing a slight upward trend, but the increase on the 8th slowed down. This was mainly manifested in the weakened increase in the medium-heavy rare earth market. Currently, downstream magnetic material enterprises have relatively stable demand for medium-heavy rare earths, and most enterprises focus their procurement on light rare earths, resulting in relatively general actual transactions in the medium-heavy rare earth market compared to the light rare earth market. Additionally, the procurement speed of medium-heavy rare earth oxides by large manufacturers has slowed down, and the overall market demand is weak, leading to a slowdown in price increases. The light rare earth market, however, is relatively active, benefiting from the concentrated tendering effect of large magnetic material manufacturers, with active market transactions. Supported by the cost of oxides, the transaction range of Pr-Nd alloy has risen, prompting metal enterprises to increase their procurement of Pr-Nd oxide. As a result, the low-priced supply in the market has rapidly decreased, and the price of Pr-Nd oxide has continued to rise.

In summary, the medium-heavy rare earth market has seen a slowdown in price increases due to the lack of a significant increase in demand, while the light rare earth market has experienced an increase in demand for concentrated procurement by magnetic material enterprises, coupled with the market's rising expectations of production halts at separation plants in certain regions, supporting the continued rise in rare earth prices. It is expected that in the short term, rare earth prices will continue to hold up well.