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It’s been a terrible week for the Lynas (ASX:LYC) share price. Here’s why

Lynas shares have been on the down this past week.
The post It’s been a terrible week for the Lynas (ASX:LYC) share price. Here’s why appeared first on The Motley Fool Australia. –

The S&P/ASX 200 index (ASX: XJO) has edged lower on Friday and is currently 0.4% in the red at 7339 points in afternoon trade.

In comparison, shares in rare earths miner Lynas Rare Earths Ltd (ASX: LYC) are up around 1% today and are changing hands at $6.95 each.

However, the Lynas Rare Earths share price is trading down by over 10% this past week, meaning it has lagged the benchmark index over this time.

Read on for more details.

What’s up with the Lynas Rare Earths share price today?

Lynas is a producer of rare earths metals, which are an essential component to the functioning of our modern day to day lives.

They are used in a huge array of applications – mostly electronics – in the components that make these gadgets work.

For instance – see those headphones you use to listen to music in your free time? The speakers of each unit will contain neodymium, a magnetic rare earths metal, that – who knows – Lynas could have even produced.

There are 16 more of these metals that are becoming increasingly more essential as technology integrates more with our lives.

What does this mean for the Lynas Resource share price?

Lynas, being a producer of neodymium, amongst other rare earths, relies on pricing of these metals in the commodities markets to generate profit.

As such, it is considered a “price taker”, and its share price will fluctuate with volatility in rare earths’ markets.

After an impressive run from 30 June to early August, where it gained over 134%, the price of neodymium has had a cooling off period.

Prior to this, it reached all time highs in March. It’s since come back down to trade at US$121,109/tonne – that’s still an 80% gain over the year.

But it has decreased by US$3,870/tonne over the last month or so. It only started to trade in the green again last week.

Aside from this, the S&P/ASX 200 Resources Index (XJR) is down 0.85% today as well, extending its loss over this past week to 5.4%.

This indicates that there’s been broad weakness across the ASX resources sector in the past few sessions.

In the absence of any market sensitive information, it appears these factors are weighing down the Lynas Rare Earths share price over the last 7 days. It has come off a high of $7.79 on 15 September.

Lynas Rare Earths share price snapshot

It’s certainly not all doom and gloom for investors in the rare earths company.

The Lynas share price has climbed 195% into the green over the past 12 months, 74% of that gain occurring this year to date.

Even in the last month, it is still up 6%. Both of these results have outpaced the broad index’s return of around 25% over the past year.

The post It’s been a terrible week for the Lynas (ASX:LYC) share price. Here’s why appeared first on The Motley Fool Australia.

Should you invest $1,000 in Lynas Rare Earths right now?

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Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Lynas Rare Earths wasn’t one of them.

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More reading

Why the Lynas (ASX:LYC)share price is sliding 12% on Monday
Why the Lynas (ASX:LYC) share price is up 86% in 2021
Here are the top 10 ASX shares today

ASX 200 energy and materials shares are leading the market on Monday

Materials sector lagged the ASX 200 on Tuesday

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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