The Lynas Rare Earths Ltd (ASX: LYC) share price is heading south today despite no new announcements from the company.
At the time of writing, the rare earths producer's shares are down 4.37% to $8.98.
In context, the S&P/ASX 200 Materials (ASX: XMJ) sector is one of the best performers on the ASX. The index which contains 39 companies that involve mining, forest products and construction materials is up 1.57% to 19,426 points.
What's driving Lynas shares to the ground lately?
Following the recent fall in Neodymium-Praseodymium (NdPr) prices, it appears investors are seeking to offload Lynas shares on Tuesday.
The company produces NdPr which is a magnetic rare earth alloy used in many modern technologies.
Since the beginning of March, the price of NdPr has been on a trending decline. In fact, in the past month, the commodity has lost more than 20% in value.
Lynas is considered as the world's second largest producer of NdPr, behind China which accounts for 60% of the global production of rare earths.
These deposits comprise a group of 17 metals that are critical to the manufacturing of many electronic products. This includes mobile smartphones, electric vehicles, aircraft engines, wind turbines, as well as military equipment.
While the NdPr price is cooling off for now, it's important to remember that Western countries are trying to suppress China's dominance in the sector.
If political tensions between the West and the Asian giant rise, this could have a profound impact on crucial products.
Lynas is seeking to disrupt China's supply of rare earths and become a vital company for advanced economies.
However, for this to happen, the company will need to increase production output significantly.
Lynas share price review
Over the past 12 months, the Lynas share price has rocketed close to 40% following positive investor sentiment.
Although, since the start of the year, its shares have recorded wild swings of more than 20% in either direction.
The company's shares are currently down 12% in 2022.
Lynas has a price-to-earnings (P/E) ratio of 29.28 and commands a market capitalisation of roughly $8.06 billion.
