Lynas holds back inventory amid low rare earths prices
Australia-based Lynas Rare Earths said Wednesday it is holding its inventory instead of selling amid plummeting rare earth prices, Kallanish reports.
The miner decided to hold all inventory of mixed heavy rare earths (SEG) and around 500 tonnes of neodymium and praseodymium (NdPr) during the third quarter of financial 2024, ending 31 March 2024.
“The market continues to be less than kind to us and to anybody else in rare earth,” Lynas ceo Amanda Lacaze told analysts during an earnings call. She believes the “slight” improvement in prices in April “will probably continue to firm, but not at a significantly accelerated rate.”
As a result, the company decided to hold some of its inventory “rather than having it sitting in other people's warehouses, appreciating as the price goes up,” Lacaze says. “There’s a general consensus that the current price is below cost for many Chinese producers and that the Chinese economy is starting to pick up momentum again,” she continues.
During the March quarter, the NdPr oxide China domestic price was $47/kg, down around 47% from $88/kg in Q3 FY23. From $50/kg in January this year, the price also dropped to $43/kg in March, according to the company’s quarterly report.
While holding its inventories has led to lower revenue for the quarter, the company expects the decision to help it “achieve better value over time.”
The Australian miner’s quarterly sales revenue fell to AUD 101.2 million ($65.64m), compared to AUD 242.8m a year earlier. Its realised price dropped 11.3% to AUD 43.8/kg. Meanwhile, it produced 1,724 tonnes of NdPr, with the production remaining roughly flat compared to 1,725 t produced in Q3 FY23.
Lynas ceo notes that the company will not accelerate production at its Malaysian operations “until we see some further improvement in the market.” Meanwhile, the Mt Weld expansion project in Western Australia remains on track, with construction activities progressing as planned. In addition, the company is expecting to start earthworks at its Texas processing plant by the end of this calendar year.
“As Lynas’ project pipeline comes to fruition, it is increasingly faced with strategic optionality,” Jefferies analysts wrote in a note on Wednesday. “That said, it is currently faced with soft NdPr and SEG markets, into which it is rationally holding back inventory rather than selling into.”
“Rare earths prices remain subdued, albeit improving, but we remain positive on the medium-to-longer-term outlook,” they add. “Rare earths markets are going through a period of stabilisation as demand catches up with the supply growth of recent years. As we move through 2024, we look for improved commodity prices, as well as progress with production ramp-ups and growth projects to support Lynas.”
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Anonymous
Very good overview of the weekly steel market.
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