China rare earth sell abroad cut won’t last

Since everybody who follows the rare earth metals manufacturing know, the sector is conquered by export from China. So a report over the weekend that China plans to cut rare earth sell abroad quotas by 72% is a serious issue for countries that need the supply.

Or maybe not. Canaccord Genuity analyst Yuri Lynk wrote in a note that he believes the Chinese government will revoke the export quotas, as the reply from worldwide markets "will be severe."

"There have been similar incidences in the new past when China has controlled outputs and exports of rare earths, but the decisions were subsequently reversed," he noted.

Mr. Lynk covers rare earth processor Neo Material Technologies Inc. He wrote that if these sell abroad quota hold up, sales from the company's recital Materials business outside China would be "somewhat impacted." But its Magnequench division, which produces powder for magnets, could profit from an oversupply of rare earths in China, as its input costs in the nation would reduce. He maintained a "buy" rating on the stock and a price target of $5.50 a share.