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>>> A Rare Earth ETF That’s Surged 59.7% YTD

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gfp927z   Friday, 10/13/17 05:41:43 PM
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>>> A Rare Earth ETF That’s Surged 59.7% YTD

By Max Chenon

October 9, 2017


The rare earth metals ETF has been a standout this year, and strengthening fundamentals may continue to support this sector pick.

The VanEck Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX), which is comprised of global companies involved in producing refining and recycling rare earth and strategic metals and minerals, rallied 59.7% year-to-date. Rare earth metals miners may continue find support from both the supply and demand side ahead.

China, the largest single country supplier of the global rare earths market, has taken efforts to cut down illegal mining have pressured the supply chain and bolstered prices, according to Metal Miner.

Furthermore, in an attempt to enforce new environmental regulations, the Chinese government has suspended operations at substandard rare-earth smelters this year, reports Nikkei Asian

“The environmental crackdowns this year appear to have been stricter than before, although crackdowns have been going on for years. Also, control over illegal mining intensified, and these factors pushed up prices of rare earths,” Fu Liyao, an analyst at chinaiol.com, told Global Times. “Other factors include the State-led buying of rare earths for additions to reserves and the consolidation of major rare-earth companies.

“Illegal mining volume has basically disappeared, compared with the previous annual level of 30,000 tons to 40,000 tons. All these factors curtailed supplies in the market and drove up prices,” Fu said.

On the demand side, technological advancements and global consumers’ increased reliance on high-tech gadgets have fueled demand for rare earths that are found in many digital devices.

For instance, with the increased popularity of electric vehicles as a means to reduce reliance on gas and lessen harmful gas emissions, Tesla and other electric car makers have enjoyed rising demand, which in turn has raised the demand for rare earth metals in numerous segments of the industry.

Several European countries have already taken steps toward banning all fossil-fueled cars before the middle of the century, and China, the world’s largest vehicle market, is also considering a ban on the sale of fossil-fueled cars, reports Rupert Hargreaves for ValueWalk.

According to Newgate research, based on current demand projections of electric cars, the increased demand could require 35,000 metric tones per year of neodymium and praseodymium, or NdPr, form current global supply of 25,000 per year by 2025.

For more information on the miners space, visit our metals & mining category.


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