How the US-China trade deal impacts rare earth stocks

Rare Earth Market Overview - The rare earth stocks in the US are declining as trade tensions between the US and China ease [1] - China controls a significant portion of the rare earth supply chain, including approximately 70% of mining, 90% of processed oxides, and 93% of magnets [4] - US companies find it difficult to compete with China in the rare earth market due to cost disadvantages, with US production costs potentially being two to three times higher [5][6] Investment and Government Support - The US administration is likely to continue emphasizing investment in US-based rare earth companies, potentially through backstop measures rather than direct stakes [6][7] - Government support is considered necessary to ensure the continued development of the rare earth industry in the US [8] - Government may need to work on the demand side, potentially offering benefits to companies using domestic magnets, such as in the EV sector [14][15] Strategic Partnerships and Timelines - US companies may expedite their entry into the rare earth market by partnering with non-Chinese companies, potentially reducing the timeline to one to two years [10][11] - Without partnerships, establishing domestic rare earth production could take a minimum of two to three years [9] Risks and Mitigation - The risk remains that China could flood the market and lower prices, hindering the capitalization of US companies [12][13] - A US-China agreement to prevent market flooding is crucial, along with ensuring that end-users source from US companies [13][14] Company Picks - US Rare Earth is considered a near-term opportunity due to its acquisition of LCM (Less Common Metals) and its magnet factory in Stillwater, Oklahoma, expected to start production around year-end [16][17] - Other companies mentioned include Neo Corp, American Resources, Royalty Management, and US Antimony [15]