China Rare Earths has issued an annual profit forecast for 2025 that marks a clear turnaround: the company expects net profit attributable to shareholders of RMB 143 million to RMB 185 million, reversing a loss of RMB 287 million the previous year. The swing into profit reflects a stronger rare-earth market in the first half of the year and deliberate operational moves by the company to capture favourable conditions.
In the first six months, rising prices across the rare-earth complex allowed China Rare Earths to increase sales through tighter coordination of production and marketing. Management says it sharpened market assessment and adjusted its sales cadence to exploit demand, delivering year-on-year growth in volumes and an uplift in operating performance. An accounting adjustment — the partial reversal of previously booked inventory write-downs under applicable standards — also provided a near-term positive boost to first-half earnings.
The company’s gains were partly eroded in the second half as market dynamics shifted. Prices for certain mid- and heavy-rare-earth products fell, with a pronounced drop in the fourth quarter. Pursuant to accounting rules, the firm increased provisions for inventory impairment in Q4, which reduced reported profit and moderated the full-year recovery.
China Rare Earths’ update exemplifies the commodity’s volatility: rare-earth prices can swing rapidly in response to changes in export policy, mine output, and downstream demand from sectors such as electric vehicles, wind turbines and permanent-magnet manufacturers. China remains the dominant producer and processor of most rare-earth elements, so fluctuations in domestic prices and inventory valuations have outsized effects both on local listed producers and on global supply chains.
The sharp biannual divergence in results underscores the importance of distinguishing realised sales and operating cash flows from accounting-driven earnings effects. Inventory write-backs and subsequent impairment charges can create headline swings that mask underlying trends in production efficiency, realised prices and contract terms. For investors and buyers, the critical metrics will be volumes sold, average realised prices for light versus medium/heavy rare earths, and cash generation.
Looking ahead, the sector’s trajectory will hinge on demand from permanent-magnet and clean-energy segments, Beijing’s regulatory stance on mining and processing, and any international policy shifts aimed at diversifying supply. If downstream demand for neodymium, praseodymium and heavy-rare-earth alloys strengthens, prices could stabilise, benefiting producers; conversely, surplus capacity or softer demand could prompt further price corrections and episodic impairment charges.
China Rare Earths’ prognosis is a reminder that commodity companies in strategically sensitive sectors can swing between loss and profit within a single reporting cycle. The firm’s 2025 turnaround is genuine but fragile: it depends on sustaining realised sales prices and managing inventory risks through volatile market phases.