Rare Earth Frenzy: From Industrial Vitamins to Strategic Chips in Great Power Rivalry, Reassessing the Strategic Value Behind Continuous Price Rises

Rare earth prices soar, policies tighten, and demand explodes. Behind this company’s forecasted performance increase of over 116% is a resource game related to national strategy.

In early 2026, the rare earth market is staging a supply and demand imbalance. The price of praseodymium-neodymium oxide has broken through ¥760,000/ton, with an increase of 23.08% since the beginning of the year. Upstream stockholders are reluctant to sell, while downstream magnet material companies have shifted from just-in-time purchasing to stockpiling.

In the capital market, the performance forecast of Northern Rare Earth in 2025 has attracted market attention—net profit attributable to the parent is expected to increase by 116.67% to 134.60% year-on-year, making the rare earth sector a market focus.

*Source: Northern Rare Earth 2025 Performance Forecast

Behind this rare earth frenzy is a multi-layered symphony of national strategic will, industrial technological upgrades, and the global energy revolution.

01 Prices Hit New Highs, Supply and Demand Remain Tight

Right after the Spring Festival, the rare earth market kicked off strongly. On February 6, the price of metal praseodymium-neodymium rose above ¥925,000/ton, and praseodymium-neodymium oxide increased to ¥752,500/ton, with a short two-week increase of 12.64%.

Tight supply is the main driver of this price increase. After the implementation of the 2024 “Rare Earth Management Regulations,” domestic rare earth mining quotas grew by only 5.88% year-on-year, with heavy and medium rare earth quotas experiencing negative growth for the first time.

Meanwhile, downstream demand remains strong. From January to June 2025, national new energy vehicle production surged by 40.61% year-on-year, with penetration exceeding 44%. Each new energy vehicle consumes 2-4 kg of neodymium-iron-boron permanent magnets, directly boosting demand for praseodymium-neodymium oxide.

Huayuan Securities analysts pointed out that spot supply of praseodymium-neodymium oxide remains tight, with upstream stockholders less willing to sell at low prices, while downstream magnet material companies have shifted from just-in-time to stockpiling procurement. This mismatch in supply and demand provides strong support for rare earth prices.

02 China’s Strategic Position in Rare Earths: From Resources to the Entire Industry Chain

China is the world’s most resource-rich country in rare earths, with proven reserves accounting for 38% of the global total, ranking first. However, China’s true advantage in the rare earth industry lies not only in resource reserves but also in a complete industry chain and technological strength.

*Source: Compiled from publicly available online information

China’s rare earth industry supplies over 90% of the world’s high-quality smelting and separation products, with a global smelting and separation capacity share of up to 94%. This dominant position grants China significant international pricing power in the rare earth sector.

Historically, in the 1970s, Xu Guangxian proposed the cascade extraction theory, pushing China’s rare earth separation technology to the forefront globally. This breakthrough enabled large-scale production of high-purity individual rare earth products, fundamentally reshaping the global supply landscape.

In recent years, policies have continuously strengthened regulation of the industry. In August 2025, three ministries jointly issued the “Interim Measures for Total Control of Rare Earth Mining and Separation,” imposing stricter total volume controls on rare earth production.

03 Emerging Industries Drive Demand Explosion, Unlocking New Applications for Rare Earths

Rare earths are known as “industrial vitamins” and “industrial gold,” indispensable for modern high-end manufacturing. With the rise of new energy, artificial intelligence, and other emerging industries, demand for rare earths is reaching a historic inflection point.

*Source: Compiled from publicly available online information

New energy vehicles are the main market for permanent magnet demand. Compared to traditional vehicles, electric drive motors require more neodymium-iron-boron magnets, increasing rare earth consumption per unit by 30%-50%.

More imaginatively, the humanoid robot sector is promising. For example, Tesla’s Optimus robot requires 20-40 kg of neodymium-iron-boron magnets per unit—ten times the amount used in new energy vehicles. As humanoid robot industrialization accelerates, demand for rare earths could see explosive growth.

Green energy is also performing strongly. In the first half of 2025, China’s wind power installed capacity increased by 104.64% year-on-year, with May’s growth rate reaching 773.78%. The reliance of direct-drive wind turbines on rare earth permanent magnets provides stable support for demand.

Technological innovation further expands the application space for rare earths. Jinli Permanent Magnet’s grain boundary infiltration technology can reduce dysprosium and terbium usage by 50%-70%; Ningbo Yunsheng’s grain boundary diffusion technology cuts dysprosium consumption by 40%. These innovations alleviate the constraints of heavy rare earth resources and pave the way for high-end applications.

04 Industry Leaders Strengthen Their Dominance, Resources and Technology Create Dual Barriers

In the industry transformation, leading companies leverage resource and technological advantages to build formidable competitive barriers.

Northern Rare Earth, as a global leader in light rare earths, controls the Baiyun Ebo deposit—the largest light rare earth mine in the world—accounting for over 80% of China’s reserves. In 2025, its mining quota accounted for 67.9% of the national total. This resource barrier secures its dominant position.

China’s rare earth industry is the “national team” for medium and heavy rare earths, controlling 70% of the reserves in southern China, further consolidating resource advantages through acquisitions like Jianghua Rare Earth. In Q1 2025, the company’s revenue surged by 141.32%, with the greatest performance elasticity to praseodymium-neodymium oxide prices.

*Source: Eastmoney

Technologically advanced companies also show strong competitiveness. Jinli Permanent Magnet’s grain boundary infiltration technology is industry-leading in mass production and has secured supply chains with Tesla robots; Ningbo Yunsheng holds a 25.3% market share in main drive motors for new energy vehicles, deeply partnering with BYD, NIO, and others.

As industry concentration continues to rise (CR5 now at 85%), leading firms will benefit from policy support and scale effects, further consolidating their market positions.

05 Future Outlook: Reassessing the Strategic Value of Resources Will Continue

Looking ahead, the strategic value of rare earths is expected to further increase.

On the supply side, rare earth quotas are tightly controlled with a growth rate of only 5%, maintaining rigid supply. Although overseas efforts to rebuild the supply chain are underway, China is expected to still dominate global rare earth mining by 2030.

On the demand side, the industrialization of humanoid robots is accelerating, with per-unit rare earth consumption far exceeding that of new energy vehicles; the penetration rate of new energy vehicles continues to rise; and wind and photovoltaic energy installations keep expanding. These factors will support long-term demand.

Some analysts believe that between 2025 and 2026, global rare earth supply will be short of demand. Under multiple domestic policies, high-end magnetic materials for new energy vehicles, wind power, and energy-saving motors are growing rapidly, shifting the supply-demand pattern toward shortages.

Financial policy support also injects confidence into the industry. In August 2025, the People’s Bank of China and six other departments jointly issued a document supporting mining companies to “accelerate reserves and production of key minerals,” guiding funds into strategic resources like rare earths. Resource security has shifted from a corporate issue to a national project.

Driven by soaring prices, the entire sector is undergoing a valuation reset. Baogang Steel’s earnings forecast once revealed a micro-law: every ¥10,000/ton increase in praseodymium-neodymium oxide prices can boost net profit by 1.2 billion yuan.

This exemplifies the development of China’s rare earth industry—when strategic resources resonate with the demands of the era, the resulting energy far exceeds expectations.

From the Sichuan Basin to Baiyun Ebo, from new energy vehicle factories to humanoid robot labs, rare earths are no longer just elements on the periodic table but are strategic chips in great power competition and keys to industrial leapfrogging.