Rare Earth Boom: It’s About More Than “Countermeasures”

On October 15, Shenghe Resources (600392.SH) surged 5.04%, bringing its year-to-date gain to a stunning 155%. The rally wasn’t isolated—China’s entire rare earth sector is on fire. The Rare Earth Index has jumped 118% this year, with five out of seven major stocks doubling in value.

1. China’s Strategic Edge: Controlling the Entire Rare Earth Chain

Despite the name, rare earth elements aren’t truly rare—but China dominates their production and processing. With 48% of global reserves and nearly 70% of total output, China is the world’s only country with a complete industrial chain.
In April and October, China escalated its export controls, expanding restrictions to include technologies and recycling processes. This move solidified its influence over global supply chains, especially amid rising geopolitical tensions.

2. Tight Supply Meets Surging Demand

China’s long-term quota and export management policies have tightened global supply. As demand from electric vehicles, wind power, and humanoid robots surges, prices have rebounded sharply.
Since January, praseodymium-neodymium oxide prices have risen 28%, while dysprosium oxide has soared over 200%. Each electric vehicle motor requires 3–5 kg of rare earth magnets — with EV sales projected to exceed 25 million units by 2025, demand will only grow stronger.

3. Profits Rebound as Exports Boom

The sector’s profitability has turned a corner. Northern Rare Earth’s net profit jumped nearly 20 times year-over-year, while Shenghe Resources expects an 8-fold increase for the first nine months.
From January to September, China’s rare earth exports grew 12.6% in volume, while average export prices more than doubled compared to last year.

4. Outlook: Bullish Momentum, But Mind the Valuation Bubble

Experts expect rare earth prices to remain volatile in the short term but trend upward in the medium term. However, with leading stocks already near record highs, investors should stay alert to overvaluation risks.
The rare earth boom isn’t just a “countermeasure” story — it’s a reflection of strategic control, rising demand, and China’s enduring dominance in critical materials.