The Lynas Rare Earths Ltd (ASX: LYC) share price is having a month to forget.
At the time of writing, shares in the Malaysia-based rare earth elements (REE) miner are trading for $6.31 – down 2.02%. Over the course of the month, it’s been even worse for Lynas – losing 9.84% in value.
While the company hasn’t released any price-sensitive news to the market since August, something has clearly spooked investors.
Let’s take a closer look.
What’s going on with Lynas?
The first point to make is that the entire market is down. While the Lynas share price has fallen nearly 10%, the S&P/ASX 200 Index (ASX: XJO) has fallen 4.49%.
It’s the steepest monthly fall the market has seen since last year. Of course, that was due to the panic caused by the worldwide COVID-19 pandemic.
The mining sector has been hit especially hard during this time. For example, the BHP Group Ltd (ASX: BHP) share price has fallen nearly 14% and the Fortescue Metals Group Limited (ASX: FMG) share price has collapsed by more than 24%.
As The Motley Fool has previously reported, iron ore prices have taken a beating. China is set on an ambitious path to reduce its greenhouse gas emissions. This has resulted in a clampdown on domestic steel production and a shift away from iron ore in favour of low-emissions steel scrap.
According to S&P Global, “A few mill sources expected China’s steel output cuts to widen further in late-September or October, mainly as the overall cuts by mid-September have remained insufficient to keep the country’s 2021 crude steel output within 2020 levels.”
While Lynas does not mine the metal, companies within any one industry sector tend to move together on the ASX.
What could be affecting the Lynas share price specifically?
As one of my colleagues has previously brought to our readers’ attention: Lynas is a price taker. The Lynas share price tends to move with the price of REE.
Recent geopolitical tensions between the US and China appear to have spilled over to the broader ASX resources space, including the rare earths markets.
This is in addition to China placing restrictions on its domestic resource producers in 2021 to curb production rates. It is estimated that anywhere between 70% and 80% of the world’s REE deposits are in the People’s Republic.
Lynas share price snapshot
Over the past 12 months, the Lynas share price has risen an incredible 141%. Year-to-date, it is up a still impressive 50.2%. Its 52-week high is $8.05 per share and its 52-week low is $2.45 per share.
Lynas Rare Earths has a market capitalisation of approximately $5.7 billion.
Should you invest $1,000 in Lynas right now?
Before you consider Lynas, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Lynas wasn’t one of them.
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*Returns as of August 16th 2021
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Motley Fool contributor Marc Sidarous 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 Bruce Jackson.
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