The prices of rare earth elements needed to make super-strong magnets have risen to their highest levels in two years after U.S. miner MP Materials (MP) halted its exports to China.
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Currently, China dominates the global supply of rare earth metals, magnets, and minerals, as well as the manufacturing of the world’s most powerful magnets. By some measures, China controls 90% of refining capacity and 70% of mined output related to rare earth materials that are needed to power everything from laptop computers and smartphones to electric vehicles and defense missiles.
China has repeatedly used its dominance in rare earth elements as leverage in trade negotiations with the U.S., drawing anger from the administration of President Donald Trump. The U.S. government has responded by taking a 15% stake in MP Materials by purchasing $400 million of preferred stock. The Trump administration has said that building a domestic U.S. rare earth supply chain is a priority.
MP Materials’ Shipments
Now, MP Materials has halted its shipments of rare earth elements to China that are needed to produce powerful magnets that are used to power electric vehicles, wind turbines, and robotic equipment. The halt in shipments to China, which comes with global magnet demand at historic highs, has pushed prices up to a two-year high.
The halt in Chinese shipments comes as the Asian nation enters its peak manufacturing season for electric vehicles, wind turbines, and consumer electronics. U.S. rare earth shipments to China fell in May and hit zero in June before jumping in July as the final MP Materials exports were sent, say sector analysts.
Is MP Stock a Buy?
The stock of MP Materials has a consensus Moderate Buy rating among 11 Wall Street analysts. That rating is based on seven Buy and four Hold recommendations issued in the last three months. The average MP price target of $72.55 implies 1.21% upside from current levels.
