3J·

Why I am so bullish on rare earths!

It's no longer a big secret that commodity stocks make up a large part of my portfolio, as I've often written posts about them.

Right now, the conflict between China and the USA is once again about rare earths for heavy magnets. Trump is threatening 200% tariffs if China does not deliver. One thing is clear: if China does not supply rare earths to the USA, everything in the automotive, technology and defense sectors will come to a standstill in a relatively short space of time. You could say that the 200% tariff would not generate any revenue for the USA, because China would no longer export anything there and, on the other hand, the US economy would come to a standstill in large parts.

I am therefore convinced that the US government will continue to do everything it can to reduce this dependency. The main beneficiaries of this will be

$MP (-1,58 %)

$UUUU (-1,19 %)

$A412UH USA Rare Earth Inc.

and also $LYC (-7,01 %)

Trump's tariff threats fizzle out in China

Asia's stock markets were predominantly negative on Tuesday. While Japan, South Korea and Malaysia are down by up to 0.9%, other markets are little changed. Shenzhen even rose by 0.7 percent. China's stock markets are thus ignoring the latest threats from US President Trump. The previous evening, he threatened the country with tariffs of up to 200% if it did not supply magnetic building blocks made from rare earths.

17 Commentaires

GeldGenie@GeldGenie

China has ~ 44 million tons of rare earth reserves. In addition, there are all the mining rights in Africa. The USA has just 1.9 million tons of reserves.

In addition, almost 99% of the global processing of heavy rare earths takes place in China, and even underdeveloped US mines such as Mountain Pass deliver their ores there for processing.

🍊 can cry all he wants - he needs China.

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Tenbagger2024@Tenbagger2024

There should be more movement when the USA starts to dismantle in Ukraine. But I think Putin will try to prevent that. That's why Trump wants a deal with Putin under the argument of PEACE.
The question is, of course, how long China will remain in lockdown and what will happen to the share prices of US companies if China starts to deliver again.

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Chris@Multibagger

@Tenbagger2024 For the reasons mentioned, it will have no impact. $MP has purchase agreements with the US government at fixed prices for many years. They are currently working hard to increase capacity in order to process the metals mined in the USA themselves.
If there is peace in Ukraine, the raw materials deal between the USA and Ukraine will take effect. US companies will then be allowed to extract the mineral resources.
I am and remain bullish!

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Brody@Brody

@Tenbagger2024 We should not expect too much from the raw materials agreement with Ukraine. If it were possible to mine profitably in Ukraine, an investor would certainly have been found in peacetime. Trump's only aim here was to cushion criticism of the financial support for Ukraine.

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Tenbagger2024@Tenbagger2024

@Brody
Maybe, but the infrastructure in Ukraine is totally outdated in order to be profitable. And there was no money for renewal.
The Americans will first have to make huge investments in order to become profitable.
The danger I see is that the investments will first be reflected in the profits. Whereby 🍊 will already provide support.

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nassimcanim@nassimcanim

China will not allow any competition at all. As soon as competition starts to emerge, China will push prices down until they become unprofitable. Trump is exerting pressure, but none that can be taken seriously in the long term. I don't see a real case for all the commodity companies. China will always remain No.1 and a complete isolation from the Chinese market would be absolute chaos

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Chris@Multibagger

@nassimcanim We'll see. So far, things are going more in my direction. Both politically and in terms of prices. There won't be complete isolation. But the rare earths in particular, which are needed for armaments, will not be left dependent on China or Russia.

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Tenbagger2024@Tenbagger2024

@nassimcanim
China has done this in the solar industry. And they are on their way in the automotive industry. At least they have almost pushed German companies out of their own market.

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nassimcanim@nassimcanim

@Tenbagger2024 I didn't even think about it, but it's really true when you look at the automotive industry. Frightening

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Chris@Multibagger

@Tenbagger2024 Well, at least in the automotive industry, it is 90% management decisions that have led to the decline. They just thought they could always push through prices for Made in Germany and failed to build affordable electric cars. At the moment, this is still kindergarten and is only reflected in China. But once BYD, Xiaomi and Xpeng are here, the battle will really begin. And there will certainly be dealer networks looking for new manufacturers in the near future.
The first one that comes to mind is Nissan.

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Tenbagger2024@Tenbagger2024

@Multibagger
This is a David versus Goliath battle with unequal weapons. In China, such a growth sector is highly subsidized, unfair working conditions, no trade unions and even forced labour.
You can only rely on Made in Germany or premium. But no one in China is interested in that anymore (see Porsche).
The only concept that still works is Ferrari, always keep the supply low.
When I see how many BYDs are unsold in China. We can only hope that the European market is not flooded with dumping prices.

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Chris@Multibagger

@Tenbagger2024 I see it a little differently. Before e-mobility, Chinese cars were already subsidized, but everyone bought the German brands because they were technically superior. They rested on their laurels and thought they could sell a Golf for 50,000 as an electric model, which is hopelessly inferior in terms of range, infotainment and connectivity. That doesn't work. If you can't do it yourself, you have to look for partners and give them a piece of the pie. Now it will take at least 10 years to catch up, if that works at all.

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Tenbagger2024@Tenbagger2024

@Multibagger
You're right, of course, that adds to the disaster.

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Chris@Multibagger

@nassimcanim To be honest, until China floods the market again, I think I've made a good profit.

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nassimcanim@nassimcanim

@Multibagger you're right, it could definitely rise a bit due to euphoria because I think many people have the same approach as you, which is not bad, but it only decays on a 2-3 year horizon

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Chris@Multibagger

@nassimcanim A little is good. I'm up a good 140% with $MP and 120% with $UUUU. And I assume that both will double again.

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