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Lynas Corporation Limited Message Board

  • stockdude13 stockdude13 May 10, 2013 1:49 PM Flag

    MCP up 32%

    Heavy short covering today. A sign that the REE space was oversold in spite of declining REE prices. A sign that possibly the worst might be behind the space and Ree prices may stabilize in the next Q. I do belive central bank stimulus will help continue the rally for the rest of the year despite the ramp up in production and oversupply.

    Sentiment: Strong Buy

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    • The price declines will work thru. MCP is still hurt by the reaction of the former Neo to the RE price spike. As a RE-buyer-magnet-seller the price spike and supply uncertainty and quotas ... led them to buy a huge pile. Now they are selling magnets today made with the RE's they bought a year ago. Every company out there is probably kicking themselves about panicking in the supply crunch.

      As time goes on the market will clear thru that inventory. A non-monopoly supply will actually make the consumers much more willing to be predictable in buying. The prices will eventually stabilize and then demand will quite likely cause some gradual increases.

      Molycorp and Lynas are in the same boat. Working to get a modern supply into the market while waiting for the insanity from the Chinese market manipulations to work thru. I think the demand for RE's is going to grow again and the prices will be such that both companies make a nice profit.

      • 1 Reply to votingmachine
      • Here is the bit in the CC:

        Michael Gambardella – JPMorgan: I think you had said earlier that you expected this business to generate about $150 million in EBITDA more and running at an annual rate of 60?

        ... skipped bits ...

        Constantine Karayannopoulos – President and CEO: No we need to get cheaper raw materials reflecting today’s raw material prices and that business should be a lot closer to that figure. But as Michael said we’re using feed materials that were purchased last year at much higher prices than what we would be buying them at today.

        So we should expect that when they burn thru the high priced feedstock, and begin making Magnaquench with today's market priced raw material, they will see the margins go back, and hopefully Neo will start to generate the expected earnings (although I was modeling $120 million at the time of the acquisition).

 
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