Copper price extends gain on Chinese recovery while US election looms
Prices climbed as much as 0.9% after China’s monthly services activity expanded at the fastest pace since July.
In lunchtime trade Molycorp was changing hands for $24.37, down $1.06 or 4%, in reaction to a downgrade and as investors continue to digest the company’s results out last week.
TheStreet Ratings downgraded the rare earth miner from hold to sell, while technical analysis at Forbes showed the stock may now be in oversold territory.
Last week Molycorp – destined to become the number one producer of the 17 elements outside China – announced it is already halfway in reaching its ultimate production target of 40,000 tonnes per annum and at the same time increased reserves at its Mountain Pass mine 36%.
However, investors are selling off the stock because the average prices Molycorp received for rare earth oxides fell 20% to $95 a kilogram from $120 a kilogram in the final quarter of last year.
Molycorp shares hit a 2012 high of $34.71 on enthusiasm over a ground-breaking deal with Canada’s Neo Material Technologies announced in March that gave it access to advanced rare earth processing capabilities and a sales channel into China.
But that euphoria has now evaporated as REE prices in China collapse and consumers in the automotive, high tech and green energy industries scramble to find alternatives.
Tuesday’s decline brings Molycorp’s losses over the past 12 months to over 60%. The counter hit a high of $77.54 on May 3 2011, but at $2.4 billion is now worth only a third of that in New York.
Read more about how rare earths have created a political fault line in the US >>
Read more about the implosion in rare earth oxide prices >>
Comments
Chris Tingus
While prices in the rare earths sector have certainly declined, given the surety of a double dip revisit in the US and even worsening prospects for Greece, Protugal, Spain and possibly Italy, coupled with higher tensions in the Middle East by late summer, demand for rare earths will dramatically change by late summer and in the longer term, I am most confident in the competencies and astute judgement and experience which Molycorp executive management holds. Indeed, China see Molycorp in its way and China’s scientists and engineers, often elected officials, know that it is Molycorp and its ambitious pursuit of rare earths especially the treasure trove in rare earths in Greenland which China lusts for and see Molycorp the winner as it acquires $1.75 billion in rare earths countering China’s efforts!
While Peter Diamandis, most brilliant and far reaching visionary looks to near earth asteroids to fuel flights into the universe and beyond, let us all understand that the rare earths (heavy) for thevforeceeable future will reach proices far higher than present and on a differing scale, even your gasoline at the pump and food costs I am sorry to say will price considerably higher so when we talk of Molycorp and rare earths and scientists and engineers like Greg Barnes and his valued rare earths understanding, surely we must look beyond the present and in the not-too-distant future clearly see precious rare earths (heavy) become far more expensive and Molycorp will certianly be the leader and thwart China from become dominant in rare earths and controlling both supply and pricing. It is Molycorp which we depend upon to assure that China does not take the lead into the 22nd century for it is the west which must secure any and all rarre earths handclasped to the expertise of Molycorp. Use this dip in pricing to buy Molycorp stock, I sure am doing so! Bravo to Molycorp’s executive management for staying the course….
Christopher Tingus
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