Shenghe Resources (盛和资源): Rare-earth tightness to persist as company speeds expansion into new resources

Market outlook: supply constraints and stronger demand

Shenghe Resources (盛和资源, 600392.SH) told shareholders that 2025’s rebound in rare‑earth prices is likely to continue as supply-side controls tighten and demand from EVs, wind turbines and robotics remains strong. The company reported 2025 revenue of RMB 14.991 billion (149.91亿元), up 31.8% year‑on‑year, and net profit attributable to shareholders of RMB 839 million (8.39亿元), a 305% jump; Q1 2026 results showed continued momentum. Prices for NdPr‑type light rare earths — used in high‑performance permanent magnets — have risen sharply from early‑2025 levels to about RMB 694–714/kg in May 2026, lifting industry margins.

Shenghe said the full implementation of China’s Rare Earths Management Regulations and tighter quota and export controls have reduced supply elasticity and could lift the price floor. It has been reported that Beijing has stepped up scrutiny of overseas resource deals amid broader technology‑security concerns, adding a geopolitical layer to the market outlook. CICC (China International Capital Corporation) research cited by the company similarly forecasts prolonged tightness in NdPr supply/demand and a gradual upward shift in the price midpoint.

Acceleration into downstream and overseas resources

To convert higher commodity prices into sustainable earnings, Shenghe is accelerating moves downstream and overseas. Its 2026–2028 plan focuses on optimizing separation capacity, scaling waste‑recycling to 15,000 t/yr, and launching high‑purity polishing and magnet materials — notably a 15,000 t/yr polishing‑powder project in Leshan and a 6N‑grade yttrium oxide line aimed at chip applications, slated for commissioning around June 2026. The firm also named Tanzania’s Engula rare‑earth project and multiple African heavy‑sand ventures as priorities and said it will push zircon‑titanium processing toward nuclear, aerospace and battery markets.

The company set an ambitious three‑year target to add at least 30 million tonnes of overseas resource reserves and a 2026 revenue target of RMB 16.5 billion (165亿元). Can higher prices and overseas expansion together preserve margins if policy or geopolitical conditions shift? Shenghe argues diversification — not putting “all eggs in one basket” — will blunt country‑level risk, but project timelines and execution will be decisive.

What to watch next

Investors will watch rare‑earth price trajectories, progress on the Leshan and Tanzanian projects, and any further shifts in export controls that affect global supply chains. Reportedly, industry profit pools are rotating toward downstream separation and value‑added products, a trend Shenghe is explicitly targeting via acquisitions and joint ventures. For Western readers: rare earths are not rare in geology but are concentrated in processing capacity; policy moves in Beijing now matter as much as geology for global clean‑tech supply chains.