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All the big rare earth names — MolyCorp, REE, etc. — are surging today.The cuplrit is a note from JPMorgan.
Molycorp (MCP) – Rare earth prices now surging in China too, raising PT to $74 – While much focus has been on rising Chinese rare earth export prices, we think less attention has been paid to the recent increase in domestic Chinese rare earth prices. Since the beginning of 2011, domestic Ce prices are up 167%, La 87%, and Nd 103%, while export prices were up 64%, 72%, and 100%, respectively. Although they are still well below export prices, domestic prices are now for the most part higher than export prices at the end of 1H10. We are raising our PT for MCP to $74 from $66 as we think these recent increases actually point to a healthier market in China and should be supportive of higher longer-term rare earth export prices.
We are increasing our longer-term price forecasts for Nd and Pr oxides (and their respective metals and alloys) closer to current Chinese domestic levels. Domestic Chinese REO prices moving meaningfully higher. While Chinese domestic prices are still well below export prices (Ce domestic 14% of export, La domestic 8% of export, and Nd domestic 45% of export), we would note that Chinese domestic prices are now for the most part higher than export prices at the end of 1H10. Domestic prices for Ce, La, and Nd now stand at $6.05/lb, $3.73/lb, and $36.90/lb, respectively, while export prices for these three oxides stood at $3.15/lb, $3.65/lb, and $16.90/lb at the end of June 2010 before China meaningfully cut its export quotas