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Molycorp, Inc. Message Board

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  • susankoffler susankoffler May 17, 2012 3:41 PM Flag

    All Metal Prices Are Falling

    Well, it tells you what type of demand is coming from refiners and manufacturers. The customers of rare earths are generally the same customers for base/precious metals. If nickel demand, and more importantly, if price hedging is declining (lower futures buying vs. selling), then that is giving you a pretty clear picture on where the economy may be heading.

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    • >>>The customers of rare earths are generally the same customers for base/precious metals.

      Not really. There are definitely some differences.

      You are correct that the prices of RE's is critical. MCP sells RE's and will sell high volumes of RE's soon. But nickel is irrelevant.

      The other thing is not to get to wrapped up in the changes. RE prices went too high too fast. If the price for used 1996 Mazda's dropped from $1 million to $500,000 ... well I wouldn't be so upset. The business needs to be analyzed and the PROFITS estimated.

      I used to invest in gold miners. There were miners that could produce gold at $100 per ounce and miners that could produce gold at $500 per ounce. Not surprisingly a drop in gold prices from $550 to $450 doesn't hurt the low cost producer as much. That $500 producer moves from profitable to non-profitable.

      RE prices are really quite high. Some will drop further and some will move up, depending on the supply and demand in the market.

      To summarize, it is not enough to know that prices have fallen. The absolute prices are important. The operational parameters are important. And the prices of nickel and copper and gold and other metals are only tangentially relevant.

    • gar-dar May 17, 2012 4:05 PM Flag

      Economic contraction is underway driven by European jitters. First thing to suffer in this environment is commodities, hence, RE prices and metal going down.

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