I can't help but think the bearish firms and traders are using the china domestic prices incorrectly. It reminds me of how they missed gains in 2009 and 2010 based on the Baltic Dry Index without seeing the ship building and valuation issues in the market. http://online.wsj.com/article/SB10001424052702304760604576426501004377160.html
China prices may well show some stabilizing in the LREE market. But all of the analysts are using prices that are more than half to one fourth current prices when making NPV calls on the non-Chinese stocks. And the REE end markets are still growing without increasing supply.
My own view is the China domestic LREE prices have mostly consolidated (not really corrected considering the up move) on the "defined element quota" possibility. If China defines the quota by element the HREE export will be more restricted and LREE's will be exported more. If no element restriction is made the more valuable HREE will be more exported (for greater profit) and the LREE will stay in greater supply domestically in China. So right now before a definition is in play the HREE go to port while the LREE's are piling up and thus the China domestic prices fall. Put an element definition in the H2 quota and that would reverse IMO.
LYC Price at posting:
$1.87 Sentiment: ST Buy Disclosure: Held
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