Why is Lynas Rare Earths Limited (ASX:LYC) up 13% in two days

Image Source: © Mehaniq | Megapixl.com

Highlights

  • Lynas was the top performer on the ASX on 17 May 2022.
  • In 5 years, the share price of Lynas has increased by whopping around 1000%.
  • The stock is witnessing some recovery this week after touching a year-to-date low of AU$8.37 last week.

Shares of the rare earths minerals producer, Lynas Rare Earths Limited (ASX:LYC) closed in green today (17 May 2022). Lynas continued the previous day's momentum and closed at AU$9.430 per share, 6.67% higher than the previous day's close.

On Tuesday, Lynas was the top performer on the ASX. This was despite no price-sensitive news from the ASX-listed material company. The benchmark index, ASX 200 Materials (XMJ), also closed in green, up 1.03%. In addition to this, the ASX 200 also closed 0.27% high.

Must read: What caused shares of Nyrada (ASX: NYR) to rally over 21% on Tuesday?

What might be pushing Lynas’ share prices?

The previous week has not been good as share prices took a deep dip and touched a year-to-date low of AU$8.37 per share. The whole Australian material sector was in red.

This week, the stock is witnessing some recovery, and including today’s gain, the shares have surged by 12.95% in the last five trading sessions. Probably, rising prices of Neodymium-Praseodymium (NdPr) might be impacting the company's share performance. NdPr is rare earth that helps in converting electrical energy into motion. NdPr is used in electric vehicles or powering industrial processes.

Given the fact that Lynas is the second-biggest producer of rare earth after China, rising price of NdPr bodes well for the company’s business.

The prices of neodymium have surged by 5% in a week, and on 16 May, it was up by 0.87%.

How much your holdings have increased if you bought Lynas shares in 2017?

If an investor had bought Lynas’ shares on 19 May 2017, then they must have got a return of eye-whooping 1,093%. It was priced at AU$0.79 per share back then and has closed at AU$9.42 apiece today.

What does Lynas do?

Lynas is a mining company that produces rare earth materials. Lynas claims it is the only significant producer of rare earth materials globally after China. The company is focused on the Mt Weld mine, located in Western Australia. This is recognised as the premier rare earth deposit. Reportedly, Lynas also operates the largest rare earth processing plant, which is situated in Malaysia. The produce at the Malaysian plant is exported to Asia, the United States and Europe.

The high-quality products offered by Lynas are, NdPr which is used in magnets, Cerium, lanthanum and mixed heavy rare earth. These materials are used in future-facing and high-tech applications such as wind turbines, electric vehicles, electronics and so on.

Suggested reading: Resource stocks rally pushes ASX 200 0.3% higher


 


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