Why did the Lynas share price rocket 20% in January?

The Lynas Rare Earths Ltd (ASX: LYC) share price went on a very strong run in January, rising by around 20%. The S&P/ASX 200 Index (ASX: XJO) climbed by 6%.

Lynas released its quarterly update on 30 January 2022, which included a number of interesting updates.

So, while investors may have liked that update for the three months to 31 December 2022, it may not have provided the fuel for a lot of recovery in the future.

We’ll have a look at the update in a moment, but let’s consider what happened in the wider market which could have impacted the Lynas share price last month.

Growth gets a boost

A number of ASX growth shares saw a pleasing rise over January as they recovered some of the lost ground from 2022.

For example, the Xero Limited (ASX: XRO) share price went up 9%, the Block Inc (ASX: SQ2) share price rose over 20%, and the Lovisa Holdings Ltd (ASX: LOV) share price climbed 13%.

It was also a good month for ASX mining shares, for example, the BHP Group Ltd (ASX: BHP) share price climbed by 8% and the South32 Ltd (ASX: S32) share price rose by 13.5%.

January saw a strong start to the year for commodity businesses as well. So, Lynas seems to have benefited from the recovery in investor sentiment for both growth shares and mining shares.

Lynas quarterly update

The business reported quarterly sales revenue of $232.7 million in the three months to December 2022, compared to $163.8 million in the first quarter of FY23 and $202.7 million in the second quarter of FY22. This is helpful for the Lynas share price.

Total rare earth production was up 6% year over year, and up 27% quarter over quarter.

Lynas explained that these numbers were up after water supply disruptions in the prior quarter.

It also said that “market prices started to increase again from December in anticipation of the late January Lunar New Year holidays and an expected rebound of the consumption in China”, though future pricing trends “will depend on China’s economic recovery”.

Lynas also revealed that progress on major construction activities accelerated at the Kalgoorlie rare earths processing facility in the quarter, while the Mt Weld expansion project is “progressing as planned”.

It continues to “progress its deliverables” for the development of a US rare earths separation facility.

Foolish takeaway

After the rare earth miner’s rise, analysts are now mixed on the Lynas share price. Of the analyst opinions that Commsec collects, there are four buy ratings, three hold ratings, and three sell ratings.

The post Why did the Lynas share price rocket 20% in January? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why is the Arafura share price surging 12% to an 11-year high?
• Why was the Lynas share price hit so hard on Tuesday?
• Here are the top 10 ASX 200 shares today
• Why Block, Core Lithium, Lynas, and Xero shares are charging higher today

Motley Fool contributor Tristan Harrison 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 Scott Phillips.

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