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:
Miner standing in front of a vehicle at a mine site.

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 happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Share Gainers

3 ASX All Ords shares up 50%+ in March

These ASX shares have been on fire this month. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher

These shares are having a good session on hump day. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to earth for ASX shares this Tuesday.

Read more »