Good comments you may be right but my thinking is
About 3 to 6 months ago I posted a presentation by Pol Le Roux Vice president of sales and marketing for Lynas. In this presentation he clearly stated that China’s legal NdPR production was about 50% of capacity. This low production combined with stockpiled supplies is more than enough to make up for illegal decline. The legal producers are almost as dirty as the illegal. How much of this 50% legal output reduction is caused by environmental restriction is not known to me. There are way too many unknowns for me to be sure of anything. But the last 7 months of dramatic price rises I can see no indication of large increases in demand. It all appears to be China restriction that could be undone quickly I think , do not know, that stock piling and speculation is now driving this price rise. If so it would not take much to cause a collapse. I believe that you were suggesting a slow rise in NdPr prices a few weeks ago. Now we have almost 10% in two days and 40% in 4 weeks, 75% since last November. that just does not sound like normal market changes to Me.
Hand power tools are a major consumer of perm magnets. The DeWalt 20 volt XR brushless series is a 3 phase non perm magnet design. It is priced higher than the perm magnet brush design. I wanted a XR hammer drill and I had to wait 4 weeks with my name on a list to get one. What happens if the XR is on price parity with the brush design because of High Nd prices? It has more power better speed control and longer battery life and that is why it is a hot seller even with a higher price. It is a bit bigger and heavier. Could deWalt already be changing lines? Could other be rushing to catch up? I have no idea but I have already stopped accumulating Lynas and I am thinking of selling but not yet. I am more risk adverse than most because my Annualized gains have gone way up as I behave that way. My gains have gone up as I worried less about catching the big winners and more about avoiding the big losers. Avoiding losers does mean you miss some good winners. Caution does cause you to bail too fast sometimes. I did that with Lynas last January. I would have more shares at a lower price right now if I had not sold then. In hind site I was wrong. IT also caused me to sell a major holding, for me, in Lynas at Us$1.4X when everyone was saying I was crazy. It goes both ways. Sell was on way down not up. I also sold a little at $1.9X on way up before high. Overall I have had a good annualized ROR on Lynas and not many can say that. About 5% annualized after inflation and taxes since I first bought not including gains on what I now hold. I will always be happy with 5% annually after T&I. actually 3% is OK to.
LYC Price at posting:
15.5¢ Sentiment: None Disclosure: Held
(20min delay)