The Australian Strategic Materials Ltd (ASX: ASM) share price is climbing higher in morning trade and is now changing hands at $10.70 apiece. That's 4.9% up on yesterday's close.
Yet the company has been sailing choppy waters these past few months, having slipped almost 22% off a high of $13.66 on 26 August.
That's a curious plunge from a company whose share price had rallied more than 70% in August alone before the drop.
Australian Strategic Materials shares are also leading the loss in the broader sector, with the S&P/ASX Materials Index (XMJ) slipping just 9% during this time.
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What's been pushing the Australian Strategic Materials share price lower?
There's been no market sensitive information from the company lately that appears remarkable on its share price.
However, the price of neodymium, the rare earths metal that Australian Strategic has exposure to, has traded sideways the last 2 months.
Prior to this, the price of neodymium, one of the most common rare earths elements, had soared 36% from June. It also hit all-time highs of $186,713/tonne earlier in the year before cooling off slightly.
However, since August, it has levelled and currently trades at $163,506/tonne – no real change over the period.
It seems the price of neodymium is impacting the company's share price, as Australian Strategic is an ASX resource share that produces the commodity.
Taking a step back, it also appears there is weakness in the broader sector as well.
As mentioned, the S&P/ASX Materials Index has slipped into the red lately and is down 5% this past month.
The index is a good proxy to gauge performance of the wider industry and, based on these measures, it appears there have been headwinds lately.
ASX 200 materials shares have been on a march down since August when they were trading at 5-year highs.
Unsurprisingly, investors are reflecting this sentiment too. The VanEck Rare Earth/Strategic Metals ETF (NYSEARCA: REMX) – a good proxy to check the growth of shares in the industry – is down 9% this past month.
So it appears there is a rotation of capital away from ASX rare earths shares that is impacting the wider sector alongside weakness in commodities markets.
Investors just aren't chasing ASX materials shares right now. The Australian Strategic Materials share price is set to be on the receiving end of these headwinds.
Australian Strategic Materials share price snapshot
It's certainly not all doom and gloom for the Australian Strategic Materials share price. Zooming out over the longer-term, it has climbed 66% this year to date and 272% in the last 12 months.
This are impressive returns that far outpace the industry's return and the S&P/ASX 200 Index (ASX: XJO)'s gain of about 20% in that time.
