Rare Earth ETF Fights for Footing as China Rare Earth's 462% Profit Surge Meets Analyst Downgrades
Published on 10/27/2026 at 14:31 | Editorial boerse-global.de
The VanEck Rare Earth ETF is wrestling with a split-screen reality. On Tuesday the fund edged up to EUR 9.29, yet it still carries a year-to-date loss of roughly 26% — and it closed Monday at EUR 9.24, hovering close to its annual lows. Behind that stubborn weakness sits a tug-of-war between blockbuster earnings from China and a steady drip of cautious news from the boardroom and the analyst desk.
A Profit Explosion in Beijing
The sector's biggest headline came from China Rare Earth Resources And Technology, which on Tuesday reported third-quarter net profit of about CNY 171 million — a jump of 461.73% from the same period a year earlier. Revenue climbed more than 63% to CNY 1.011 billion over the same stretch. Management credited higher prices for certain products and a sharper sales strategy.
Through the first nine months of 2026, the company has booked total revenue of CNY 2.657 billion. Media reports point to recovering demand in forward-looking industries as the tailwind behind the sector. Analysts at Soochow Securities flagged that prices for dysprosium and terbium could hold steady in the near term, provided end-customer orders arrive as expected.
Long-Term Demand Still Points Up
Broader forecasts reinforce the bull case. The International Energy Agency expects demand for critical minerals to nearly double by 2040, with lithium demand on track to more than triple over the same horizon. Copper faces a projected supply gap of about 25% against primary demand by 2035 unless significant new mining capacity comes online.
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Operational progress is showing up at the mine level too. Elevra Lithium reported a 25% quarter-on-quarter increase in ore output for the September quarter while cutting unit operating costs by 14% — exactly the kind of efficiency gain that tends to underpin the sector's longer-term value.
The Drag: Diversification and Downgrades
Not every signal is constructive. Semiconductor giant TSMC is reportedly exploring factory-automation motors that sidestep rare earths entirely, aiming to reduce exposure to supply-chain disruptions tied to China's export controls. Reuters noted the talks are at an early stage and no broad rollout has been announced, but the move underscores a wider push toward diversification in high tech — notable given that rare earths have long been considered all but irreplaceable for the powerful magnets used in electric motors and industrial equipment.
Analysts have been trimming expectations as well. Goldman Sachs cut its price target on MP Materials to USD 57 from USD 65 last Tuesday while keeping a buy rating, citing current pricing for rare earths and metallurgical coal. TD Cowen followed, lowering its target to USD 60 from USD 75. Those revisions capture the tougher environment facing producers of strategic metals.
Supply Security and a Malaysian Green Light
On the operational front, Malaysia's government said Monday that radiation readings outside Lynas Malaysia's disposal facility remain within safety limits. Measurements as of September 30 stayed below 20 millisieverts per year — an important confirmation for the major producer's continued operations. The country also approved its first export of unprocessed rare earths for research and development under its revised rules, loosening a previously imposed moratorium for a single application.
Technicals Flash Oversold
Geopolitics continues to cloud the picture. A Swissmem survey of Swiss high-tech firms found a third already suffering under Chinese export controls, with significant delivery delays. China still controls about 60% of global mine production and roughly 90% of refining capacity, keeping Western dependence high.
Chart watchers have a clear signal to work with: the Relative Strength Index sits at 26.0, deep in oversold territory. Investors are now watching whether the strong Chinese earnings can lift the price sustainably off its recent floor. The sector's structural role in global electrification remains intact — energy applications alone accounted for three-quarters of demand growth last year. For the fund itself, the VanEck Rare Earth ETF, a distributing share class that reinvests income directly, reported net assets of about USD 914.17 million across 87.05 million outstanding shares as of October 19.
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