Dahlman Rose on Metals & Mining: WTO Ruling May Eventually Impact Chinese Rare Earth Export Policy
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Price: $40.23 +2.24%
Rating Summary:
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Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
Rating Summary:
2 Buy, 1 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
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Dahlman Rose on Metals & Mining: WTO Ruling May Eventually Impact
Chinese Rare Earth Export Policy
Analyst, Anthony Young, said, "The World Trade Organization has ruled that China must eradicate its export taxes and quotas for industrial minerals. These industrial minerals include bauxite, zinc, yellow phosphorus, coke, fluorspar, magnesium, manganese, silicon carbide, and silicon metal. While rare earth elements were not part of this ruling, we anticipate that a similar appeal will be filed requesting that the Chinese abolish their export quotas for rare earth elements. While it typically takes the WTO two to three years to rule on trade challenges, we anticipate that some sort of change will be required to the current Chinese system."
'Rare earth prices remain well above our forecasted range, thus we remain comfortable with our long-term thesis that these equities will trade higher. But given the near-term decline in prices that we think is possible, it may be difficult for shares in the sector to outperform the broader materials indices. We maintain our Buy ratings on Avalon (NYSE: AVL)(Buy, $8 PT), Hudson Resources (HUD.CN)(OTC: HUDRF)(Buy, C$1 PT), Molycorp (NYSE: MCP)(Buy, $70 PT), and Rare Element Resources (NYSE: REE)(Buy, $9 PT)."
Chinese Rare Earth Export Policy
Analyst, Anthony Young, said, "The World Trade Organization has ruled that China must eradicate its export taxes and quotas for industrial minerals. These industrial minerals include bauxite, zinc, yellow phosphorus, coke, fluorspar, magnesium, manganese, silicon carbide, and silicon metal. While rare earth elements were not part of this ruling, we anticipate that a similar appeal will be filed requesting that the Chinese abolish their export quotas for rare earth elements. While it typically takes the WTO two to three years to rule on trade challenges, we anticipate that some sort of change will be required to the current Chinese system."
'Rare earth prices remain well above our forecasted range, thus we remain comfortable with our long-term thesis that these equities will trade higher. But given the near-term decline in prices that we think is possible, it may be difficult for shares in the sector to outperform the broader materials indices. We maintain our Buy ratings on Avalon (NYSE: AVL)(Buy, $8 PT), Hudson Resources (HUD.CN)(OTC: HUDRF)(Buy, C$1 PT), Molycorp (NYSE: MCP)(Buy, $70 PT), and Rare Element Resources (NYSE: REE)(Buy, $9 PT)."
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