Wednesday, April 27, 2011

Molycorp (MCP) (SHZ) (AVL) (REE) (XING) Close Down on Tough Trading Day

Rare earths miners have been soaring since the announcement by China it's going to cut back on exports significantly. but that wasn't the case Tuesday, as the major rare earths miners pulled back with China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Avalon Rare Metals (AMEX:AVL), Rare Element Resources Ltd (AMEX:REE), Qiao Xing Universal Resources, (Nasdaq:XING) and Molycorp, Inc (NYSE:MCP) closing down on the day.

Most think that the rare earth supply will remain tight for at least five years, even with the media hype of all the projects coming on line. Those proposed projects will take years to go through the process before production begin.

According to Molycorp CEO, Mark Smith, there will probably be two coming on stream within that five-year period. During that same time rare earths demand is projected to double annually.

That means those companies that already have operations going should enjoy solid pricing power during that period of time.

But it appears it'll be a somewhat volatile rare earths ride until there's much clearer economic clarity for the sector. It appears bullish long term at this time.

Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX) closed down on Tuesday as well, closing at $27.80, falling $0.20, or 0.71 percent.

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