bright future ahead for lyc, page-14

Aushead wrote.
With a little research you can quickly find the sense in this. Using the MT Weld basket, prices have risen from $10 in 2009 to $160 currently, the bulk of the rise in the past 6 months. This has been mainly driven by supply disruption outside China and not by a massive increase in underlying demand so logically you would expect some retracement once the initial shock passes. For example, end users building some inventory rather than relying on "just in time" from China. However IMO the big kicker will be La & Ce and I think this goes some way to explain Moly's focus on "mines to magnet" (or water purifiers) strategy.
Hi Aushead,
Supply disruption outside China...?? There is noone o/s China supplying...or do you mean that China disrupted the supply ??If its the latter,they have been lowering the quota for 5 yrs,and continue to do so.

The tariffs that China has imposed on the REE,s is a GOV. tax...that wont go away,so there is an inbuilt safety net to the price...ie the end products need a price to be profitable + gov tariffs (most at 25%).
Put LYC into China...so say the $14 cost..min 100% profit=$28+ 25% tariff=$35 min basket price.

Reported:60% of the mines in China do not meet the safety/enviromental recent regulations/requirements set out by the Gov...they have 2 yrs to be compliant.
Any new mine must meet these critera ..now.

So for the next 2 yrs there will be many disruptions to Chinese Supply as with any other major refurbishment projects.

China has already allocated $50B Y towards the Greener China.
These costs will be added to the price of REE,s..add min $10 to basket...$45.
If we look at a general $1B tag on any REE company taking 10-15 yrs to complete...$45 is not going to be a carrot.
The bottom line is that the Tariffs,costs etc have now all been built into the current $150 plus Basket price.
To me the base price is somewhere between $100-$150,with demand driving the rest.
One would think by Sept it will be over $200.

The standard of living in China is skyrocketing,thus inflation is their current worry..will raise interest rates.
Salaries and wages are rising,and in the coming years thats going to continue to rise as well.Transport costs,housing/technology/mining everything will increase.

Demand.
not by a massive increase in underlying demand so logically you would expect some retracement once the initial shock passes.

Demand is bursting at the seams.
3rd world countries continue to emerge rapidly..all wanting to be part of the good life..TV,Ipods,computers etc etc etc..
THE WORLD IS GOING GREEN...NOT ITS ALL GREEN ALREADY.
WE ARE IN THE DEVELOPMENT STAGE..
Infrastructure in Japan,the bombed out Middle East,Rising India,Asia.etc
Toyota Prius a prime example..they have to cut back manufacturing..have about a 3 mth stockpile left.
Glass polishing companies are closing down..3 already...no supply..no business..out of business.
China..as above.
Plus easy to see that China will be an importer by 2014.
BTW
Who will export to China?
LYC is doing Japan,Europe,US.
MCP Japan/US.

The REE world hasnt taken off because in the next crucial 10 yrs they might make $45 a basket,nor $60..nor $100.

I think Aushead you are right..but you are about 15-20 years too early with your outlook.