Simple Oil is in tight supply demand position. It is also used by everybody. For almost 8 years REO is in over supply. China is still running at about 60%~ 70% of capacity. Lynas is making improvement that will add more. There are things coming down the road that will significantly increase REO demand. People read about these on this board and behave like they are already here. They are 2 to 10 years away. The demand will not be instantaneous, it will ramp. Look at taxes imposed 1 July in China, AUS and others at first said instant price jump to cover taxes. Then when REO prices dropped significantly in July it was inventory work off. These prices dropped while much of China was shut down for environmental reasons. This is not hard to understand we are still in an oversupply situation.
Also people seem to think that demand is fixed, it is not, it is very flexible. Every sharp run up has an impact. The bubble of 8 years ago caused LED lights to replace CFLs, major impact to heavy REO. The run-up in NdPr two years ago caused DE Walt to change all there battery tools to Non PMM motors. And Milwaukie to change most to non PMMs. I have been told neither of these are that big in AU. DE Walt is number one in US by a big margin and Milwaukie is major not sure how it ranks. Could US be a bigger market? Note others may have changed but DE Walt and Milwaukie are the tools I buy and use and many around me use, so I am aware of what they are doing.
REO is used by everybody as well as oil, few make the connection.
LYC Price at posting:
$1.94 Sentiment: Sell Disclosure: Held
(20min delay)