Morgan Stanley cuts MP Materials stock amid NdPr oversupply...

Morgan Stanley cuts MP Materials stock amid NdPr oversupply concerns

  |  Editor Ismeta Mujdragic

Published Mar 13, 2024 11:21AM ET


On Wednesday, Morgan Stanley adjusted its stance on MP Materials Corp (NYSE:MP), a leading rare earth minerals producer, by downgrading the stock from Overweight to Equalweight. The firm also revised its price target for the company's shares to $15.50 from the previous $26.00.

This decision comes amid concerns over the near-term supply and demand dynamics in the market for neodymium-praseodymium (NdPr), which are key elements in manufacturing permanent magnets used in electric vehicles (EVs) and wind turbines.

The downgrade reflects a cautious outlook on the rare earths market, as highlighted by the analyst's comments on the current supply-demand scenario. According to Woodmac's projections, the NdPr market is likely to experience a slight oversupply in 2024 and 2025. This situation is attributed to a combination of factors, including production cuts in major end markets, along with delays and cancellations of projects related to EVs and offshore wind turbines.

This article goes out to all the members including ole' Nick Curtis who thought the merger of MP Materials was a stellar business plan for Lynas. At least the Lynas board had the common sense to see this was a disastrous folly.

In my opinion, MP Materials is turning out to be an exact duplication of the Molycorp debacle, which will give Lynas a virtual monopoly for the entire North American (NAFTA), and South Asia markets. We may feel some pain to get there, but MP'S model of sending their concentrate to a failing economy in China, with no technical expertise to process rocks into valued oxides will be the death of them.

Look by summer (Northern Hemisphere) for MP to impose Force Majeure limitations on its GM and other supply contracts. Maybe by then, it will have processed another 1/2 pallet or 400kg. of its Neodymium to capture the world market. MP Materials is an ailing dog that will eventually be put down.

As i mentioned before, good management buys good companies. Not the dogs of the DOW.

GLTA