Rare Earth Prices Surge Over ¥120,000/Ton—Supply Crunch Meets AI-Driven Demand Boom

Q: Rare Earth Prices Surge Over ¥120,000/Ton—Supply Crunch Meets AI-Driven Demand Boom

Rare earth prices have vaulted past ¥120,000 per ton as global supply chains fracture and AI hardware demand explodes—reshaping investment landscapes overnight. Forget cyclical fluctuations: this structural imbalance, fueled by China’s tightening quotas and surging needs from humanoid robots to eVTOLs, signals a permanent end to cheap critical minerals. CITIC Securities forecasts new applications alone will consume 33,000 tons of magnets annually by 2035. Investors now face a dual opportunity: upstream miners leveraging pricing power and high-end magnet makers capturing AI-era growth. With inventories lean and policy discipline unwavering, the era of strategic scarcity has begun—no bubble, but a steady climb with real stakes for A-share portfolios.

Title: Rare Earth Prices Surge Over ¥120,000/Ton—Supply Crunch Meets AI-Driven Demand Boom

By Arvin | January 29, 2026

Rare earth elements—the “vitamins of modern industry”—are experiencing a dramatic price rally in early 2026, with key oxides like neodymium and praseodymium surging by more than ¥120,000 per ton. This isn’t just a cyclical bounce; it’s the opening act of a structural supply-demand imbalance that could reshape investment opportunities across China’s strategic materials sector.

For overseas investors focused on A-share and H-share markets, the rare earth rally offers both a macro warning signal and a micro opportunity—especially in high-performance magnet makers powering the next wave of AI hardware, robotics, and low-altitude aviation.

Price Surge: Data Snapshot

According to data from the Baotou Rare Earth Exchange, as of January 28, 2026:

Oxide Neodymium: ¥732,500/ton (+20.08% since end-2025)
Oxide Praseodymium: ¥733,300/ton (+19.92%)
Oxide Yttrium: ¥77,000/ton (+33.46%)
Multiple other rare earth compounds (e.g., gadolinium oxide, neodymium metal) up over 10%

This marks the sixth consecutive quarterly increase in rare earth concentrate prices, driven by coordinated pricing actions from China’s two dominant producers: 【北方稀土-China Northern Rare Earth-600111.SH-Mining & Materials】 and 【包钢股份-Baotou Iron & Steel-600010.SH-Steel & Mining】, both of which recently raised Q1 2026 rare earth concentrate transaction prices.

Supply Constraints Tighten Globally

China remains the epicenter of rare earth supply:

Produced 270,000 tons in 2024—69% of global output (U.S. Geological Survey)
Domestic mining quotas grew just 5.9% YoY in 2024, down 15.5 percentage points from prior year
Medium-to-heavy rare earth quotas have remained flat for years, creating chronic tightness

Meanwhile, external supply chains are fraying:

Myanmar’s civil unrest has severely curtailed illegal rare earth exports
Vietnam enacted new laws banning raw rare earth ore exports in late 2025

With global inventories already lean, these disruptions amplify price volatility—and favor vertically integrated players with secure feedstock access.

Demand Explosion: Beyond EVs to AI Hardware

While electric vehicles remain the largest consumer of NdFeB (neodymium-iron-boron) magnets, two emerging sectors are accelerating demand:

Humanoid Robots: Each unit requires high-torque, miniaturized motors using premium NdFeB magnets for joint actuation. As companies like Tesla, Xiaomi, and Chinese startups ramp prototypes, magnet demand per robot could reach 1–2 kg.
Low-Altitude Economy (eVTOLs & Drones): Electric vertical takeoff aircraft demand ultra-efficient, lightweight motors—precisely where rare earth permanent magnet motors excel.

CITIC Securities forecasts that by 2035, these new applications alone could consume 33,000 tons/year of NdFeB, or 5.5% of total demand—rising to 7.6% by 2040.

Winning Stocks: Magnet Makers Outperform

Among A-share rare earth magnet companies, earnings are surging. Of the 26 listed rare earth magnet firms, 9 have issued 2025 profit guidance—and 8 reported net profit growth, with several exceeding 100% YoY:

【正海磁材-Zhenghai Magnetics-300224.SZ-Advanced Materials】:
Expected net profit: ¥310–380 million (+235.7% to +311.5% YoY)
Driven by >20% volume growth and >40% increase in EV motor shipments
【金力永磁-JL MAG Rare-Earth-300748.SZ-Permanent Magnets】:
Already delivering small-volume NdFeB magnets for eVTOL clients
Covered by 18 analyst firms—most in the sector
【北方稀土-China Northern Rare Earth-600111.SH-Mining & Materials】:
Upstream control + downstream expansion = margin resilience
15 analyst ratings, strong policy tailwinds
【三川智慧-Sanchuan Wisdom-300066.SZ-Smart Metering & Magnets】:
Subsidiary Tianhe Yongci reversed losses due to inventory write-backs amid rising prices
Net profit forecast: ¥128–160 million (+100.7% to +150.9%)

Also notable: 【厦门钨业-Xiamen Tungsten-600549.SH-Rare Metals & Hard Alloys】, with 7 analyst endorsements, benefits from integrated tungsten-rare earth operations and magnet R&D.

Strategic Outlook: “Steady Rise, Not Bubble”

Unlike speculative commodity spikes, this rare earth rally is underpinned by:

Policy-driven supply discipline (China’s export controls + quota system)
Irreplaceable material role in decarbonization and AI-era hardware
Low inventory buffers across the global supply chain

CITIC Securities concludes: “Starting in 2026, the global rare earth supply-demand gap is likely to widen persistently. Prices will trend upward steadily, and industry profitability will continue to improve.”

Investment Takeaway

For international investors, the rare earth theme offers a dual-layer opportunity:

Upstream: Quota-holding miners like 【北方稀土-600111.SH】 benefit from pricing power.
Downstream: High-end magnet specialists like 【金力永磁-300748.SZ】 and 【正海磁材-300224.SZ】 capture value from AI, robotics, and aerospace megatrends.

Given China’s strategic control over processing capacity (>90% globally), these A-share names provide unique exposure to the physical backbone of the AI and green transition—a rarity in today’s software-dominated tech narrative.

As supply tightens and new demand curves steepen, the message is clear: the age of cheap rare earths is over—and the era of strategic scarcity has begun.

— Arvin
Global Markets Analyst | Specializing in China A/H Equities

Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Investing in Chinese equities involves risks including regulatory changes and market volatility. Please consult your advisor before making investment decisions.