Wednesday, November 16, 2011

"Prices of Rare Earth Metals Declining Sharply" (AVL; MCP)

Like you couldn't tell from the stock prices.
There's a reason we haven't been posting on the rare earth miners and a reason why we're starting to get interested here.* MCP $32.81, down 33 cents.
From the New York Times:
 After nearly three years of soaring prices for rare earth metals, with the cost of some rising nearly thirtyfold, the market is rapidly coming back down.

International prices for some light rare earths, like cerium and lanthanum, used in the polishing of flat-screen televisions and the refining of oil, respectively, have fallen as much as two-thirds since August and are still dropping. Prices have declined by roughly one-third since then for highly magnetic rare earths, like neodymium, needed for products like smartphones, computers and large wind turbines.

Big companies in the United States, Europe and Japan that use rare earths in their manufacturing have been moving operations to China, drawing down inventories, switching to alternative materials or even curtailing production to avoid paying the extremely high prices that prevailed outside China over the summer, executives said at an annual conference in Hong Kong on Wednesday.

As demand for rare earths wilted outside China, speculators dumped inventories, feeding the downward plunge. Cerium peaked at $170 a kilogram, or $77 a pound, in August but now sells for $45 to $60 a kilogram. Prices are negotiated by buyers and sellers directly with one another and reported by market information companies like Asian Metal, based in Pittsburgh.

That is still far above cerium’s price of $6 a pound three years ago, before China, the world’s dominant producer, sharply cut its export quotas.

“We all learned a hard lesson in July and August, how high these prices can go before customers begin yelling,” said Mark Smith, the chief executive and president of Molycorp, the only American producer of rare earths...MORE
*From September 27ths "So Molycorp's President Bought a Bit of Stock (MCP)":
...Here's the 12-month chart, $30 looks like decent support:

The stock traded as low as $31.41 yesterday before closing at $34.56.
In late premarket action the stock is up $2.39 at $36.95

Sept. 20 
UPDATED: More on JPM's Downgrade of Molycorp (MCP)
UPDATED: "Molycorp Slammed As a Major Bull Turns Bearish" (MCP)
After Thrashing by JPM, Morgan Stanley Says Nice Things About Molycorp (MCP