Just confirmed, Chinese soldiers at border and production facilities halting shipment
- Thread starter retaildaytrader
- Start date
This chart was found at the very end of a presentation from Rare Element Resources, and in our view it undermines the whole idea that China is going to use up all of its own rare earth metals, and cut off the world.
As you can see, China's supply clearly exceeds domestic demand, and is expected to do so for a long time. Thus there really is no incentive for them to choke off the world. And of course it's the "CHINA IS CHOKING OFF THE WORLD" headlines that are driving stocks like Rare Elements Resources and MolyCorp, and every two-bit penny stock with the word "rare" in its name.
Add in the supply in the rest of the world, and there shouldn't be too many problems.
Click on chart to enlarge
Read more: http://www.businessinsider.com/here...rs-dont-want-you-to-see-2010-10#ixzz13Texn7H6
Quote from slimpickingsfor:
This chart was found at the very end of a presentation from Rare Element Resources, and in our view it undermines the whole idea that China is going to use up all of its own rare earth metals, and cut off the world.
As you can see, China's supply clearly exceeds domestic demand, and is expected to do so for a long time. Thus there really is no incentive for them to choke off the world. And of course it's the "CHINA IS CHOKING OFF THE WORLD" headlines that are driving stocks like Rare Elements Resources and MolyCorp, and every two-bit penny stock with the word "rare" in its name.
Add in the supply in the rest of the world, and there shouldn't be too many problems.
Click on chart to enlarge
Read more: http://www.businessinsider.com/here...rs-dont-want-you-to-see-2010-10#ixzz13Texn7H6
Another interpretation of this chart is that the global supply and demand are almost equal. Hence, if China does cut back on exports or production as they say they might, there will quickly be a negative imbalance outside of China. The chart clearly shows little opportunity for building of reserves as supply ~= demand. Rare earths are used up as fast as they are produced, it seems.
Since global demand is clearly rising, and since China has stated they might slow down exports, this graph shows the potential for a supply shock. There is no guarantee it will happen, but the potential is there.
It's also interesting how, according to the chart, in three of the past four years there was more demand than supply for rare earths. But, in the future, supply always matches demand.
One can assume the chart is an accurate projection, if one chooses. In that case, any investors in REEs are free to take their 50% to 300% profits and bail and new investors can stay out if they choose. There is a lot of risk inolved in REEs with the potentially high rewards. It is up to the individual to decide what to do.