The Lynas Rare Earths Ltd (ASX: LYC) share price is in the red today despite no new announcements from the company.
At the time of writing, the rare earths producer’s shares are down 4.93% to $10.21.
Lynas joins a number of resource shares also going backwards today, including Pilbara Minerals Ltd (ASX: PLS), down 4.79%, and Australian Strategic Materials Ltd (ASX: ASM), down 5.77%.
What’s been happening?
It appears investors are looking to cash out of Lynas shares today alongside the recent fall in neodymium-praseodymium (NdPr) prices.
The company produces NdPr, a magnetic rare earth alloy used in many modern technologies.
Since the beginning of March, the price of NdPr has been on a trending decline, losing almost 13% in value in a month.
Lynas is considered the world’s second-largest producer of NdPr, behind China which accounts for 60% of global production of rare earths.
In case you were wondering, rare earths comprise a group of 17 metals that are critical to the manufacturing of many electronic products. This includes mobile smartphones, electric vehicles, aircraft engines, wind turbines, and military equipment.
While the NdPr price is cooling off for now, it’s important to remember that Western countries are trying to counteract China’s dominance in the sector.
If political tensions between the West and the Asian giant rise, this could profoundly impact crucial products.
Recently, the United States warned China that it could face tough sanctions should it decide to provide support to Russia.
Lynas share price snapshot
Over the past 12 months, the Lynas share price has rocketed more than 60% on the back of positive investor sentiment.
Although, since the start of the year, its shares have recorded wild swings of more than 20% in either direction. The company’s shares are flat in 2022.
Lynas has a price-to-earnings (P/E) ratio of 33.51 and commands a market capitalisation of roughly $9.22 billion.
The post Why is the Lynas share price backtracking 5% today? appeared first on The Motley Fool Australia.
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More reading
- Why A2 Milk, IGO, Lynas, and Sayona shares are dropping
- ASX 200 (ASX:XJO) midday update: IGO dealt blow, Block’s data breach, Xero jumps
- The Lynas Rare Earths (ASX:LYC) share price just hit a 10-year high!
- The US is backing Aussie critical minerals projects, and these ASX mining shares could be set to reap the rewards
- Why is the Lynas (ASX:LYC) share price having such a stellar start to the week?
Motley Fool contributor Aaron Teboneras 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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