The Lynas share price has surged 15% in 2 weeks. What’s the deal?

Investors continue driving up the Lynas share price in May.

| More on:

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Shares of Lynas Rare Earths continue creeping higher on Tuesday, adding to gains this year to date
  • The market for rare earths continues to grow with Lynas itself struggling to keep up with global demand, the company says
  • In the last 12 months, the Lynas share price has climbed 81%

The Lynas Rare Earths Ltd (ASX: LYC) share price is shifting higher on Tuesday and now trades at $9.645, up 1.53%.

The gain marks a 15% increase since 10 May when the stock bounced from a low of $8.37 – its lowest point in six months.

By comparison, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) has gained 6.6% over the same period and is up 0.44% on the day so far.

What’s up with the Lynas share price?

Lynas shares have been creeping higher lately despite no market sensitive updates from the company.

Noteworthy, however, is the price of rare earth neodymium that has climbed almost 7% over the past month, bringing its increase to 90% in the past 12 months.

Neodymium had been trading at record highs in February 2022 before reversing course and bottoming in April.

Since then, prices for the rare earth have been climbing again.

Neodymium is predominantly used in products such as microphones, headphones, computer hard disks, electric motors, and many electrical goods.

With a surge in demand for electronic appliances over the last few years, prices for rare earths such as neodymium have also risen.

According to a report from Market Research Guru, this trend is set to continue, reflecting positively on rare earths stocks such as Lynas.

The report found:

The global Electrical Appliances market was valued at US$8.55 billion USD in 2021 and will grow with a [compound annual growth rate] CAGR of 4.12% from 2021 to 2027.

Meanwhile, further research submits that “[t]he global household appliances market is expected to grow from $502.28 billion in 2021 to $557.70 billion in 2022 at a CAGR of 11.0%”.

Lynas is actually the only rare earths processor outside of China, putting it front and centre in the race to keep up with global demand.

The company said that its “biggest challenge right now is to grow as fast as the market,” as quoted by Reuters. It added that simply keeping “pace with the market” isn’t enough.

Lynas has also received nearly $15 million in federal funding “to commercialise an improved process for producing rare-earth carbonate,” as outlined in the federal government’s 2022 Critical Minerals Strategy.

Motley Fool contributor Zach Bristow has no position 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 Scott Phillips.

More on Share Gainers

A graph ablaze with fire going up, indicating a fired up and surged share price
Share Gainers

These 3 ASX 200 tech shares are on fire today

Tech shares are broadly outperforming today following a strong lead from the US NASDAQ.

Read more »

A graphic showing a businessman running up a white upwards rising arrow symbolising the soaring Magellan share price today
Share Gainers

Why Regis Resources, Sayona, Woodside, and Xero shares are pushing higher

These ASX shares are on form on Tuesday...

Read more »

A GWR Group female employee in a hard hat and overalls with high visibility stripes sits at the wheel of a large mining vehicle with mining equipment in the background.
Resources Shares

Why has the Pilbara Minerals share price soared 57% in FY22?

How did the Pilbara Minerals share price perform in the financial year?

Read more »

A man with a scrappy beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.
Technology Shares

How Brainchip shares gained 63% in a year when tech stocks nosedived

The computer hardware provider was once considered a meme stock. Is it fair dinkum now?

Read more »

A technical manufacturer checks his work in a high-tech lab with precision equipment in the background.
Share Gainers

Guess which ASX All Ords share soared 21% to an 8-year high on Monday

One ASX All Ordinaries share enjoyed a stellar start to the week.

Read more »

Green arrow with green stock prices symbolising a rising share price.
Share Gainers

Why APM, Block, Breville, and Superloop shares are charging higher

These ASX shares are charging higher on Monday...

Read more »

health workers shake hands and congratulate each other on good news
Share Gainers

This ASX All Ordindaries healthcare share is ripping 17% higher amid a new contract win

Investors seem to like the contract win from this healthcare player.

Read more »

A boy leaps and flaps his arms as he tries to fly with some birds on the shoreline of the beach.
Share Gainers

5 best ASX All Ordinaries shares in June

Why did these ASX shares fly while the All Ords dropped?

Read more »