China Northern Rare Earth: H1 Net Profit Expected to Increase 112.74%-121.33%; Rare Earth Prices Overall Strengthened and Consolidated

On July 14, China Northern Rare Earth's share price rose, and as of the close on July 14, it was up 2.18% at RMB39.83 per share.

On the news front, the H1 earnings forecast released by China Northern Rare Earth showed that, based on preliminary estimates by the company's finance department, net profit attributable to owners of the parent for H1 2026 is expected to be RMB1.98 billion to RMB2.06 billion, an increase of RMB1.05 billion to RMB1.13 billion compared with the same period last year (statutory disclosed data), up 112.74% to 121.33% YoY. Net profit attributable to owners of the parent after deducting non-recurring gains or losses for H1 2026 is expected to be RMB1.99 billion to RMB2.07 billion, an increase of RMB1.093 billion to RMB1.173 billion compared with the same period last year (statutory disclosed data), up 121.90% to 130.82% YoY.

The main reasons for the expected increase in earnings for the period are as follows:

During H1 2026, the company served the national rare earth resource strategy and fully implemented safety management and control requirements across the rare earth industry chain. Affected by factors such as raw material supply constraints on the market side and the release and sustained growth of downstream demand at multiple points, rare earth product prices strengthened overall and consolidated.The company focused on its annual production and operation targets, made overall plans and adopted comprehensive measures, strengthened comprehensive budget management, coordinated efforts to reduce costs, improve quality and increase efficiency, scientifically organized production scheduling, intensified marketing operations, deepened reform and innovation, enhanced group management and risk prevention and control, promoted the high-quality deep integration of professional management, lean management and 5S management, advanced the construction of key projects, accelerated the development of new quality productive forces through management and scientific research innovation, and provided solid support and assurance for the company's strong operating performance with sound industry chain value creation capabilities and core competitiveness.

The company scientifically refined its production organization and operations;production of rare earth smelting and separation products, rare earth metal products, and new rare earth materials all reached record highs for the same period;its subsidiary Inner Mongolia Northern Rare Earth Magnetic Materials Co., Ltd. achieved operating revenue of about RMB9.5 billion in H1, up about 107% YoY, maintaining growth momentum for three consecutive years; its subsidiary Inner Mongolia Xi'aoke Hydrogen Storage Alloy Co., Ltd. officially put its first batch of 1,000 hydrogen-powered two-wheelers into operation in Baotou, with cumulative safe driving mileage reaching 170,000 km, and the project delivered notable demonstration results. The company continued to benchmark against advanced internal and external practices to tap internal potential, strengthened refined management, and significantly improved multiple economic and technical indicators. It implemented targeted measures based on each business segment: in the smelting and separation segment, it overcame new production cost changes caused by rising raw and auxiliary material prices, effectively controlled cost fluctuations, scientifically organized production scheduling, and ensured product supply to meet new demand; in the rare earth metals segment, it used the reinforcement of lean production concepts as a lever, further strengthened on-site process operation management through digital and intelligent tools, and achieved new breakthroughs in economic and technical indicators such as quality and material ratio; in the rare earth new materials and applications segment, it fully leveraged the advantages of new capacity, precisely matched client demand, and made new progress in promoting sales through production. The Company deepened collaboration and synergy along the industry chain and, on the basis of ensuring stable product supply, consolidated the foundation for cooperation with downstream customers.

The Company closely tracked market demand, strengthened marketing management, optimized the sales mix, customer credit evaluation, and product account-term management, and adjusted and shortened account terms by category. It safeguarded its base business with long-term contract orders and met differentiated market demand through retail sales. Sales of rare earth metals and magnetic materials rose steadily, achieving full coverage of top-tier magnetic material enterprises; sales of lanthanum-cerium products grew YoY, further reducing historical inventory; sales of polishing materials grew YoY; the Company developed five new equipment items and 20 customized and specialized new products, and application scenarios for its products continued to expand.

The Company efficiently advanced the construction of key projects and continuously improved its intelligent and information-based capabilities. Phase I of the Rare Earth Green Smelting Upgrade and Renovation Project was put into operation, with the entire production line fully connected, and Phase II construction advanced in an orderly manner; projects involving mergers, acquisitions and restructuring, joint ventures and cooperation, and capacity and production expansion along the industry chain covering rare earth metals, magnetic material alloys, magnets, and secondary resource utilization were accelerated. Secondary resource utilization projects achieved higher volumes and better quality and efficiency; the Company accelerated its digital and intelligent transformation, and its digital and intelligent capabilities continued to improve.

Regarding its 2026 operating plan, China Northern Rare Earth announced in its 2025 annual report: 2026 is the first year of the “15th Five-Year Plan” period and an important year for the Company to advance high-quality development and accelerate its efforts to become a world-class rare earth leader. The Company will follow Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as its guide, take forging a strong sense of community for the Chinese nation as the main theme, fully implement the guiding principles of the 20th National Congress of the Communist Party of China and all plenary sessions of the 20th CPC Central Committee, implement the guiding principles of General Secretary Xi Jinping's important speeches and instructions on Inner Mongolia and the rare earth industry, as well as the decisions and deployments of higher-level authorities such as the Inner Mongolia Autonomous Region and Baotou City, adhere to the general principle of pursuing progress while ensuring stability, fully, accurately, and comprehensively implement the new development philosophy, courageously fulfill its responsibilities and missions, steadily improve operating quality and efficiency, build a full-element and full-category industrial system, promote the deep integration of technological innovation and industrial innovation, accelerate the pace of deepening reform, enhance modern governance, continuously strengthen core functions and enhance core competitiveness, accelerate its development into a world-class rare earth leader, ensure a good start and a solid first step for the “15th Five-Year Plan” period, and make new and greater contributions to the construction of the “two rare earth bases.” Main production and operation targets for 2026 (these targets are planning targets only, and whether they will ultimately be achieved remains uncertain; they do not constitute a substantive commitment by the Company to investors. Investors and relevant parties should maintain sufficient risk awareness in this regard and understand the differences between plans, forecasts, and commitments): achieve operating revenue of more than 44 billion yuan and total profit of more than 3.5 billion yuan. On the premise of meeting operating targets, employee income should move in step with enterprise economic performance and labor productivity.

A review of the SMM Pr-Nd oxide price trend in H1 shows: at the start of the year, Pr-Nd oxide stood at 609,000 yuan/mt, and by end-February it had hit an H1 high of 890,000 yuan/mt, a cumulative rise of 46.7% from the beginning of the year. The core driver came from the supply side: spot Pr-Nd oxide remained tight, futures rallied sharply, suppliers held back from selling amid strong bullish sentiment, and metal companies' pre-holiday stockpiling purchases pushed prices up rapidly. At the same time, Myanmar ore supply disruptions, slower-than-expected production resumptions at domestic separation plants, and a boost from market sentiment combined to produce an “undersupply + bullish supply withholding” effect. However, from March to April, under the impact of negative supply-side news and weak demand in traditional end-use sectors, Pr-Nd oxide prices pulled back quickly to around 700,000 yuan/mt. In April, higher China Northern Rare Earth concentrate prices, supply support from production halts at separation plants, and the release of export orders under the extended export control window together drove a slight rebound in prices. From May, the downstream sector gradually entered the off-season, and procurement turned more cautious. Starting in late June, affected by factors such as the formal implementation of the Mineral Resources Law Implementation Regulations, which lists rare earths as strategic minerals, and production cuts at scrap recycling enterprises due to tax invoice issues, Pr-Nd oxide prices were boosted again, rebounding to 742,500 yuan/mt on June 30.

According to SMM price data, on July 14, the average price of Pr-Nd oxide was 762,500 yuan/mt, down 0.33% from the previous trading day. Currently, affected by an intense tug-of-war between upstream and downstream, oxide market prices are fluctuating noticeably, while the metals market is somewhat quiet due to sluggish inquiries; supplier offers remain relatively firm, with no notable adjustments. In the short term, given production cuts and suspensions at some raw ore separation and scrap recycling plants and oxide suppliers' limited willingness to sell at low prices, Pr-Nd product prices may drift higher amid fluctuations.