It's been a relatively pleasant day of trading on the ASX boards so far this Wednesday. At the time of writing, the All Ordinaries Index (ASX: XAO) has gained 0.45%, putting the index at just over 7,720 points. But let's talk about the galloping Arafura Rare Earths Ltd (ASX: ARU) share price.
Arafura shares are on fire today. The rare earths producer is currently rocketing a stunning 11.82% to 62 cents per share — a new 52-week high for Arafura.
But it's also the highest the company's shares have traded at in not three, not five, not ten, but eleven-and-a-half years. Yes, the last time Arafura shares traded in the 60-cent range was in late 2011:
So what's behind the new 11-year high that Arafura investors are enjoying today?
Why is the Arafura share price at an 11-year high?
Well, most of the heavy lifting was done in 2022 – a year that saw Arafura shares rise by a whopping 121%.
As my Fool colleague Monica reported last month, this was due to a few factors, including rising demand for rare earths, positive developments at the company's Nolans Project, long-term supply deals with major companies like Hyundai, and love from ASX brokers.
But let's talk about what Arafura shares are doing today. It's not often that an ASX share rockets by more than 10%.
Well, unfortunately, it's not entirely clear what is driving Arafura shares so convincingly higher. There hasn't been any major news from the company itself today.
But what we do know is that Arafura's peers in the materials sector are also having a cracker of a day. Take the Lynas Rare Earths Ltd (ASX: LYC) share price. It's currently up by a robust 4.37% at $9.80 a share. Fellow minerals explorer Australian Strategic Materials Ltd (ASX: ASM) is doing even better than Arafura, currently up an eye-catching 12.53%.
Lithium shares were also on fire today, with Pilbara Minerals Ltd (ASX: PLS) gaining around 3% this monring, while Sayona Mining Ltd (ASX: SYA) was up close to 4%.
So it looks as though investors are flooding into these sorts of shares en masse today. Given there is no other news out from Arafura, perhaps we can conclude that the company is just benefitting from a flood of optimism and goodwill for ASX materials shares this Wednesday.
At the current Arafura Rare Earths share price, this ASX materials share has a market capitalisation of $1.31 billion.
