(Reuters) -Australia's Lynas Rare Earths ( LYSCF ) reported a steeper-than-expected drop in its first-half profit on Wednesday, hurt by soft realised prices and subdued demand from China.

The world's largest producer of rare earths outside China reported a net profit after tax of A$5.9 million ($3.74 million) for the six months through December 31, a significant miss from the Visible Alpha consensus of A$36.2 million.

That compares with the profit of A$39.54 million it reported a year ago.

Market conditions for rare earths have been challenging over the past couple of years due to weak China demand and a soft EV outlook beyond the world's second-largest economy.

"The rare earths market continues to be subject to complex influences," Chief Executive Officer Amanda Lacaze said, further stating that the company sees the "current challenges as short-term issues".

The rare earth miner also reported higher costs during the period, driven by higher neodymium and praseodymium sales volume.

($1 = 1.5763 Australian dollars)