One of China’s biggest rare earth producers has hiked prices significantly, underscoring tightening market conditions and high geopolitical tensions in the midst of a raging conflict in the Middle East.
On Friday, China Northern Rare Earth Group said it had set its rare earth concentrate transaction price for the second quarter of 2026 at 38,804 yuan (about $5,390) per tonne, excluding tax, based on material containing 50% rare earth oxide (REO).
The Inner Mongolia-based company added that this price will adjust by 776.08 yuan per tonne (roughly $108) for every percentage point change in grade. The adjusted price represents a 44.6% increase over that of the first quarter, and is more than twice higher than this time last year.
Formula-based pricing
While the update appears routine, it underscores a defining feature of China’s rare earth industry: pricing is not left to open market forces, but guided through structured mechanisms embedded across the supply chain.
The company said the price was determined under an existing arrangement with Inner Mongolia Baotou Steel Union Co., its related-party supplier, using a standing concentrate pricing formula tied to rare earth oxide prices from the first quarter of 2026. The new benchmark was reviewed and approved at an internal management meeting.
The new pricing comes amid intensified supply chain risks across many industries that rely on materials flowing through the Strait of Hormuz. While the war in the Middle East has not severely impacted rare earths like it did with other minerals like aluminum, it created a global shortage of sulphuric acid, which is used to leach and separate ores in mining.
To combat this, China announced last week that it plans to block its own shipments of sulphuric acid starting in May. The decision comes just one year after Beijing placed export restrictions on rare earth products in retaliation to US tariffs, leveraging its dominance in the sector.