Molycorp, Inc. (NYSE: MCP) is getting a second look this morning. Morgan Stanley is noting that rare earth minerals may have now bottomed out in price after a 25% drop. The belief is that price-sensitive buyers are now able to return to the market to buy REO materials and also noted a seasonality issue from Japan.
Today’s news is not really an upgrade, but it is certainly a positive for a sector where the stocks have now pulled back by more than half from their peak in 2011. We have covered some aspects of this, and there is always a bit of a wild card aspect of this sector. China remains the lynchpin in the story as any hint of news that it will raise or lower quotas on rare earth exports can move these players up and down without verification or logic.
Molycorp, Inc. (NYSE: MCP) is up almost 7% at $26.20; Rare Element Resources Ltd. (AMEX: REE) is up 5.2% at $5.65; and the exchange-traded fund of Market Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX) is actually down 0.3% at $17.12 due to it having foreign stocks within its portfolio.
JON C. OGG
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