Uncommon earth miner and processor MP Supplies (NYSE: MP) had fairly the week to recollect, each operationally and on the inventory market. On the again of some fairly favorable information, the corporate’s shares raced greater than 16% increased over the course of the week, in line with information compiled by S&P Global Market Intelligence.
A uncommon enterprise
MP Supplies owns and operates the one uncommon earth mine within the U.S. Uncommon earths, for these unfamiliar, are metals which might be used within the manufacture of specialty magnets utilized in common high-tech merchandise similar to smartphones.
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As the one native uncommon earth miner and processor on our shores, MP Supplies has attracted a lot consideration within the present tariff warfare, which has a U.S.-China standoff at its heart. The Asian nation has by far the very best reserves of uncommon earths, and final week it halted export of those supplies.
Simply earlier than the beginning of the buying and selling week, the Monetary Occasions cited “folks aware of the matter” as saying that the Trump administration was contemplating an government order that might allow the stockpiling of uncommon earth supplies.
That wasn’t the one growth within the saga. On Thursday, MP Supplies stated it had ceased transport uncommon earth focus to China. This issues, as a result of the corporate depends closely on enterprise companions within the nation to course of the supplies.
Volatility alert
Within the press launch asserting that transfer, MP Supplies wrote that “Promoting our precious essential supplies underneath 125% tariffs is neither commercially rational nor aligned with America’s nationwide curiosity.”
It identified that a lot of its manufacturing finally ends up with clients outdoors of China, together with home shoppers and people in nations similar to Japan and South Korea. It additionally stated it’s persevering with to supply and stockpile uncommon earths.
Whereas the bullish response to the Monetary Occasions article was comprehensible, traders want to appreciate it is a fluid and doubtlessly unstable state of affairs that might change quick. On condition that, I might keep away from MP Supplies inventory for now.
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Eric Volkman has no place in any of the shares talked about. The Motley Idiot recommends MP Supplies. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
