China rare earth firms' stocks soar on trade war speculation




A villager shovels cast-off tailings of crushed mineral ore that contain rare earth metals in Xinguang Village, located on the outskirts of the city of Baotou in China
A villager shovels cast-off tailings of crushed mineral ore that contain rare earth metals in Xinguang Village, located on the outskirts of the city of Baotou in China's Inner Mongolia Autonomous Region  

By Luoyan Liu and John Ruwitch

SHANGHAI (Reuters) - Shares in rare earth-related companies in China soared on Tuesday, a day after Chinese President Xi Jinping visited a rare earth firm in southern China, sparking speculation the sector could be the next front in the Sino-U.S. trade war.

Xi on Monday visit JL MAG Rare-Earth Co Ltd in Jiangxi province, state media reported.

China accounted for 80% of the rare earths, a group of 17 chemical elements used in high technology consumer electronics and military equipment, imported by the U.S. from 2014 to 2017.

So far, China's rare earths exports have been spared from recent tariffs by the United States, which has decided not to impose import duties on those and some other critical minerals from China as part of the trade war.

Beijing, however, has raised tariffs on imports of U.S. rare earth metal ores from 10 percent to 25 percent from June 1, making it less economical to process the material in China.

Analysts said that Xi's visit might indicate China is considering using rare earths as a weapon in the trade war, which provided support for the shares of the Chinese firms.

"No question it's saber rattling," said Ryan Castilloux, managing director of Adamas Intelligence, a consultancy that tracks the rare earths market. "I think China would be reluctant to cut off supplies to anyone just yet, but the optics are designed to send a clear message - we know your vulnerabilities."

Shares in JL MAG Rare-Earth Co Ltd surged the maximum limit of 10% on Monday following Xi's visit, and rose another 10% on Tuesday.

Shares in Innuovo Technology Co Ltd, a rare-earth permanent magnetic materials and products maker, also soared 10% to their highest since October 2017. The firm's shares have gained 54.7% so far in May.

Yantai Zhenghai Magnetic Material, Chengdu Galaxy Magnets Co Ltd and Jiangmen Kanhoo Industry Co Ltd rose by as much as 9%.

In Hong Kong, China Rare Earth Holdings Ltd soared more than 80%.

Asked if China would consider limiting rare earth exports to retaliate against the United States, China's foreign ministry spokesman Lu Kang said on Monday that Xi's visit was normal and there was no need for over-interpretation.

Limiting rare earth exports to the United States would have an impact as U.S. consumption relies on China, said brokerage Pacific Securities.

However, RBC Capital Markets warned a Chinese ban could backfire by prompting the start up of rare earths production from other countries, breaking China's hold on the market.

"Should China hike prices for the U.S. or shut it out completely, it would simply speed up that process, leading to rapid development of alternative supplies," it said. "Brazil, Vietnam, Russia, India and Australia currently stand out as key beneficiaries by having the world's largest reserves and production."

(Additional reporting by Tom Daly; Editing by Christian Schmollinger)

COMMENTS

More Related News

China Is Buying Iranian LPG Despite Sanctions, Ship-Tracking Shows
China Is Buying Iranian LPG Despite Sanctions, Ship-Tracking Shows

(Bloomberg) -- After being hit by the trade war and U.S. sanctions on Iran, some Chinese buyers of liquefied petroleum gas from the Persian Gulf nation are finding it's too tough a habit to kick.China sourced around a fifth of its LPG -- used as cooking fuel, in cigarette lighters and to make plastic

Duterte Stands by China, Doubts Own Fishermen in Sea Collision
Duterte Stands by China, Doubts Own Fishermen in Sea Collision

(Bloomberg) -- Philippine President Rodrigo Duterte is standing by China over a collision involving the two nations' boats in the South China Sea, with his spokesman casting doubts on local fishermen's accounts of the incident.In his first public statement about what he described as a "maritime incident," Duterte said China's side should be heard on the collision that resulted in a Philippine vessel carrying 22 fishermen sinking in disputed waters on June 9. The crew were rescued by a Vietnamese fishing boat and a Philippine Navy ship."It is best investigated. I don't issue a statement now because there's no investigation and no result," Duterte said in speech at a Philippine Navy...

Why US-China trade war risks hurting firms in both countries
Why US-China trade war risks hurting firms in both countries

U.S. businesses are imploring President Donald Trump not to expand his tariffs to $300 billion in goods from China that have so far been spared in his trade war with Beijing. Huawei is at the heart of the trade war that Beijing is engaged in with the Trump administration, which has accused Chinese companies like Huawei of committing forced technology transfers from American companies and stealing their trade secrets.

Hong Kong activist Joshua Wong leaves jail, vows to join protests
Hong Kong activist Joshua Wong leaves jail, vows to join protests
  • World
  • 2019-06-17 14:53:31Z

Leading Hong Kong democracy activist Joshua Wong walked free from prison Monday and vowed to join historic anti-government protests rocking the finance hub, as activists kept up pressure on the city's embattled pro-Beijing leader. Organisers said some two million people -- more than a quarter of

China
China's Xi to visit North Korea this week ahead of G20

Xi Jinping will make the first trip to North Korea by a Chinese president in 14 years this week, state media said Monday, as Beijing tightens relations with Pyongyang amid tensions with the United States. Xi will visit Pyongyang on Thursday and Friday at the invitation of North Korean leader Kim Jong Un, said Chinese official news agency Xinhua. The timing is likely to raise eyebrows at the White House as it comes one week before the G20 summit in Japan, where US President Donald Trump expects to meet with Xi to discuss their protracted trade war.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.