Rare Earths Stocks Stung By China Export Increase (MCP, AVL, REE, NEMFF, LYSCF, REMX)
Shares of Molycorp (MCP), the largest U.S.-based rare earths miner, are down 2% after China, which controls 95% of the global export for rare earths, pledged to raise export quotas in the second half of this year, perhaps in a bid to impress the World Trade Organization (WTO). The WTO has chided China for its export practices for the 17 elements used to make laptops, military equipment and smartphones, among other high-tech gadgets.
The news is weighing on the Rare Earth Stocks Index to the tune of 1.4% today. Analysts came to the defense of rare earths stocks with JPMorgan reiterating an “overweight” rating on Colorado-based Molycorp, saying that Chinese rare earths exports will remain tight and that prices will remain high.
Dahlman Rose notes that Chinese rare earths exports are still down on a year-over-year basis and the research firm reiterated bullish views of Avalon Rare Metals (AVL), Rare Element Resources (REE) and Molycorp, on which it has a $120 price target, more than double where the shares currently trade. Dahlman Rose said the fundamentals in the rare earths space remain strong and that any weakness is a buying opportunity.
Investors can track the Rare Earth Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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