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The market can be a fickle beast, and that’s perhaps most exemplified by what we’re seeing in rare earth stocks at the moment, at least when it comes to the ASX. Two weeks ago, we had an everything-metals-rally making itself felt, then came the fears prompted by the new Fed pick Kevin Warsh, which helped to kill momentum in silver (though it was probably overdue a reality check, anyway).
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Since then, copper has stalled (and the U.S. has currently built up its largest copper inventory in 30 years), and at the same time, gold remains around US$5,000/oz – it looks like, for now, that could be where it stays.
(BNP Paribas see it rising to US$6K/oz this year; more firebrand analysts see it doing double that, but that’s fairly bold in an increasingly unpredictable world.)
The silver slump put a shock through commodity-headed-bullishness of Week 5, but quietly, there’s been one commodity that (apparently) didn’t get the memo, continuing to climb to three-year-highs.
Is neodymium back?
Neodymium, often bundled with praseodymium and labelled NdPr, is effectively a benchmark price for the broader REE catalogue (a vast simplification, yes, but largely true on a vibes-based analysis) and the focus of Washington’s proposed price floors for MP Materials.
The neodymium price is presumably why Arafura Rare Earths (ASX:ARU) has been failing to meet FID for years, and its rising price is likely why Lynas Rare Earths (ASX:LYC) is up over +2% on no news Wednesday.
While futures for a metal doesn’t always translate into what it’s priced at within behind-closed-doors offtake and supply contracts, which is what really matters from a stockpicking point of view, it’s curious that we’re not seeing a top gainers board on Wednesday chock full of REE miners.
That’s not wholly surprising: We got a rate hike last week, which likely pushed some investors into defensives (that’s a trend rolling out in the U.S. right now).
And, we get U.S. jobs tonight and inflation on Friday night, which will give the global market much to chew on, and perhaps for as long as gold stays “stalled” at US$5K/oz, the metals madness might stay quiet.
But with neodymium prices staging a return to COVID-era-levels of excitement, we mightn’t be far off the market paying more attention.
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