Rare Earth Stocks Surge as Major Manufacturer Warns Higher Prices Likely (MCP) (REE) (AVL)
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Shares of rare earth stocks are ramping higher Tuesday, with the move attributed to a briefing paper from conglomerate GE's (NYSE: GE) Lighting unit about the dire situation in the rare-earth industry.
MolyCorp (NYSE: MCP) is up 5.5 percent, Rare Earth Resources (AMEX: REE) is up 4 percent and Avolon (AMEX: AVL) is up 4.4 percent.
In this paper, GE discuses the shortage of rare earths and the surging prices of the minerals. GE states "the situation remains volatile and further price increases seem highly likely."
GE notes that half of the phosphor used in linear fluorescent (LFL) and compact florescent (CFL) products are derived from rare earths. "Over the last 12 months, the prices of some Rare Earths – including Terbium and Europium, both used in fluorescent lamp phosphors – have increased by around one thousand per cent, others by even more," GE said. This has lead to stockpiling by some dealers, driving up prices further still.
GE said demand for some rare earths will undoubtedly outpace supply for some time to come, although over the medium- and longer-term the "lost" production can be replaced. GE notes mines in USA, Canada, Australia and Vietnam are opening or re-opening and recycling could release thousands of tons of materials currently "stored" in old electronics and other product.
GE said while no one is sure what will happen next, the company is taking a number of actions including setting up a team to manage the "unprecedented" supply chain situation and looking to expand its base of suppliers. GE warned further significant price adjustments of its product may be unavoidable.
MolyCorp (NYSE: MCP) is up 5.5 percent, Rare Earth Resources (AMEX: REE) is up 4 percent and Avolon (AMEX: AVL) is up 4.4 percent.
In this paper, GE discuses the shortage of rare earths and the surging prices of the minerals. GE states "the situation remains volatile and further price increases seem highly likely."
GE notes that half of the phosphor used in linear fluorescent (LFL) and compact florescent (CFL) products are derived from rare earths. "Over the last 12 months, the prices of some Rare Earths – including Terbium and Europium, both used in fluorescent lamp phosphors – have increased by around one thousand per cent, others by even more," GE said. This has lead to stockpiling by some dealers, driving up prices further still.
GE said demand for some rare earths will undoubtedly outpace supply for some time to come, although over the medium- and longer-term the "lost" production can be replaced. GE notes mines in USA, Canada, Australia and Vietnam are opening or re-opening and recycling could release thousands of tons of materials currently "stored" in old electronics and other product.
GE said while no one is sure what will happen next, the company is taking a number of actions including setting up a team to manage the "unprecedented" supply chain situation and looking to expand its base of suppliers. GE warned further significant price adjustments of its product may be unavoidable.
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