Slashdot Mirror
Chinese Rare Earths Producer Suspends Output
concealment writes "State-owned Baotou Steel Rare Earth (Group) Hi-tech Co. said in a statement released through the Shanghai Stock Exchange that it suspended production Tuesday to promote 'healthy development' of rare earths prices. It gave no indication when production would resume and phone calls to the company on Thursday were not answered. Beijing is tightening control over rare earths mining and exports to capture more of the profits that flow to Western makers of lightweight batteries and other products made of rare earths. China has about 30 percent of rare earths deposits but accounts for more than 90 percent of production. Beijing alarmed global manufacturers by imposing export quotas in 2009. It also is trying to force Chinese rare earths miners and processors to consolidate into a handful of government-controlled groups."
China is finally flexing its grip on the tech industry, more to come certainly.
Unix, an obscure operating system developed by bored researchers in an attempt to get a better game playing experience.
Start putting tariffs on anything made with Chinese rare earths. Since China is a net exporter, they have the most to lose playing these games.
They're capitalists, with all the dirty trappings and failings of western businessmen, only without the whole problem of human rights.
Someone probably needs to remind these people that artificially manipulating prices like this can get burned badly in the end.
Two solutions exist for America - first, repeal all free-trade agreements. Second, the perennial favorite: bomb em!
China has about 30 percent of rare earths deposits but accounts for more than 90 percent of production.
It sounds like we should consider mining from the other 70 percent.
Are you actually trying to use Slashdot to manipulate stock prices for you? *ugh*
"When life gives you lemons, don't make lemonade. Make life take the lemons back!" -- Cave Johnson
but I made a bunch of $$$$ last year with this one
It's down 74% off it's 52-week... are you shorting it???
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
I made a bunch of $$$$ last year with this one.
By any chance, was that money made by buying the stock, then posting messages online about it to generate interest and raise prices, then selling the stock at the new higher price?
You do not have a moral or legal right to do absolutely anything you want.
He's promoting healthy development of his stock's price.
They feared that it could be used to suppress protest or support unpopular rule.
This is what happens when you outsource production of a key component of a critical technology. Quoth the fine article,
The United States, Canada, Australia and other countries also have rare earths but most mining stopped in the 1990s as lower-cost Chinese ores came on the market.
In other words, it sounds like we set ourselves up for this by going for the quick buck.
Il n'y a pas de Planet B.
... And this strategy never works. Even in a cartel it rarely works because to make money output has to resume and to make maximum profit, the price has to be at the level that clears the market.
Good luck to you china, I wonder how long before they can no longer stand their fast.
Liberty.
Um, no. We are not in Afganistan for the minerals. Sending valuable peolpe and equipment into a mine in a country where explosives-enthusiastic people want you dead is just insane.
Seriously, if you get a bonus check at your job, for $10k and you go to invest it are you going to be remotely tempted to chip in on a "New Long Term Afgani Business Venture?"
Because if that appeals I can connect you to a very well known Nigean Prince with even better offers.
America exports the worlds supply of helium, hasnt produced a millilitre more for over 2 decades, and keeps the price artificially low.
OPEC sets quotas and prices for global oil supplies, and can suspend or restrict production whenever they feel the need.
American agricultural conglomerates like ADM and General Mills collude to set the price at which they will accept corn from farmers. too much corn does not drive the price of it down, instead its maintained by dumping cheap corn as an export, or siloing it for next year.
how has china in any way changed how capitalism has worked for the past 270 years? The only thing thats generated outrage is chinas willingness to take an aggressively competitive position in the global economy, instead of a subservient one. If you dont like it, consider pushing for more organized labor.
Good people go to bed earlier.
Yeah I made a lot of money with them as well, but then I bought them again right before the crash and then I doubled down at around $30. Good news is I don't have to pay capital gains tax for quite a while.
isn't one of the reasons we are still in Afghanistan that they have an imperial C4ton of rare earth minerals in the mountains??
Any person using FTFY or editing my postings agrees to a US$50.00 charge
How can it possibly NOT be "economic" when the entire economy is forced (at gunpoint if necessary, like any instance of government) to "contribute" to the political system?
Let's call a spade a spade here. If a government takes your money by force -- which all of them do -- then the political system effectively *is* the economy.
We should prepare ourselves for the future in which everything will have to be recycled.
Ezekiel 23:20
That's funny, because all of my economics books and professors always taught us it was an economic system, not a political one.
I guess in a way, if you squint at it right. Sure the government is forcing communism on everyone, but at least under the dictionary definition, a country could be communist and have a democracy. Don't tell me a country can be communist and capitalist.
Step 2. Watch as almost everyone else gets out of the business because they can't profit at your price, leaving you with 90% of the market.
Step 3. Now try to increase profits. When you realize you can't raise prices because the other 10% undercut you and make most of the profit, cut off production entirely.
Step 4. Watch as the other 10% raise prices (to the level you wished you got) and make a profit at your expense. Then watch as they expand, cutting your original market share from 90% to 70%.
excitingthingstodo.blogspot.com
Now maybe my Molycorp stock will go back up! :D
I beg to differ, OPEC has run successfully as a cartel for quite some time.
Yes, they all more or less cheat, but not too much. In the end, they still drive the prices.
I made a bunch of $$$$ last year with this one.
By any chance, was that money made by buying the stock, then posting messages online about it to generate interest and raise prices, then selling the stock at the new higher price?
That's extremely unlikely. There haven't been any new higher prices for MCP in a long time. It peaked at $77 a year an a half ago and has been crushed, ever since. It's down around $11, now. The only people who made money were the ones who were short.
Besides, message board pumping only works for thinly-traded stocks. With 6 million shares of MCP changing hands every day, a random dude on some board isn't going to move the needle.
it suspended production Tuesday to promote 'healthy development' of rare earths prices
If you want to promote "healthy development" of prices, raise the prices. If you go too high, you'll know when people stop buying from you or start developing relationships with a third-party.
Perhaps this will promote some laws/rules around this sort of behavior. It's similar to cartel or price-fixing behavior when you've got a cornered market like this.
However, it's not like this is the only market where this happens. While the petroleum market is a bit more diverse, supplies are still choked in order to drive up prices etc.
No. Or rather, they do have minerals, but that's not why we're there and we're not getting the minerals. We're leaving by 2014 without the contracts.
Tic-Tac-Toe, Global Thermonuclear War, and relationships all have the same winning move.
I guess by "promote healthy pricing" they mean guarantee that every other major country will start their own mining operation and eventually all but put them out of business. I think they really meant they're greedy assholes driving the price up but my proposed end result is more realistic.
Go look it up. Their name is not very good. No they aren't abundant like silicon, aluminium, or iron, but they are not these extremely rare elements that you can't find many of. They are fairly plentiful.
So if China wants to price things up too much there really isn't a good reason not to go after them in other locations.
You sir have learned the lesson from Age of Empires well. Always go out an mine the remote resources first - then when they run out and people are fighting, you'll have plenty of supply back home.
Unfortunately in the US, we export coal (for example) while offering subsidies to those companies.
According to Wired, that mine dates back to the 1980s.
While I agree it likely is not why we are there, the economic figuring misses the mark.
You forget that the people who would profit off such an arrangement and the people who are paying for it are two groups. There are quite a few historical precedents where private companies convince states to go to war, only to hand over the resource rights to the company.... thus the company's major expense is wining and dining a few key people while the tax payer picks up the tab for the actual military part of it.
It gained some 200% last year over a few good 30%+ jumps, then crashed like crazy. It's down, yes, that means it's the best time to buy.
Seriously amateurs. Did you get taken in in 2005-2008 "BEST TIME TO BUY HOUSE PRICES ARE GOING UP UP UP!!" too? Going up... been going up... gold prices have been going up, people screaming gold will reach $2000, $5000, $10,000 in August of 2011, why do you think G Gordon Liddy was pushing gold so much then? When gold crashes down, it will be a good buy, and you will be like "It's down 95% off its 52-week... are you high? Why would I buy gold? How did you make money on this stuff?"
Support my political activism on Patreon.
Lesson by D. MacArthur. Never get involved in a land war in Asia
These guys also make cerium, right?
They own a big portion of the American, debt, and now they are defining pricing for THEIR product (which is not OIL).
I applaud them, but also at some point, am very concerned, this new business model (thanks to the oil industry precedent) is what is driving
so many back into poverty!! I know not everyone should have a computer, but it is nice to know most households have one....
The fact is, with MS pushing bigger software junk that makes you need better machines each time, we have no choice but to get the latest pc box....
with the price going up for all components, we are back to paying about 1000$ for a decent box....thats sad!!!
Your books and those professors are wrong, the anonymous post on slashdot overrules them.
Does sound a little shady, but he is doing what pump and dumpers usually don't do: He's admitting he owned the stock and made some money on it. The P&D'ers usually like to run "articles" where the fact that they were paid in a stock grant is mentioned in the fine print.
If you do your due diligence first, this story is one that might legitimately make Molycorp worth buying.
That said, you have to see if Molycorp has any significant impairments to using this to their advantage. If China only alters production until just before Molycorp's mine comes back online, and then starts dumping again, then those shares you bought could tank. China is definitely in the driver's seat when it comes to Molycorp's future stock price.
Even then, though, buyers in industry might well decide they want their supplier to provide a steady supply and shun China even if it drops the prices again. That would make some long term sense, but the lure of dirt cheap components may well make long term thinking unlikely to come to pass.
Needless to say, this is a risky investment, but not a completely insane one. And it is one I'd probably only make if I was an experienced trader in these sorts of goods. This is not something you go to e-trade and pick up a thousand shares of on one story.
You're mixing your isms. Socialism is a political system, often using communism as its economic system.
Is 1563649 a prime number?
BTW it was my understanding America used to be the major provider over a decade ago and we simply stopped. Shows this was a bad idea.
Not if your intention is to let the competition use up their supply while ensuring your own in the the future.
Well, most of us aren't smart enough to pick the bottom of the market. When it comes to equities, I'm old-fashioned and still look at fundamentals. MCP made some questionable acquisitions and their profits are almost zero. The shorts are very strong ahead of their Nov 8 earnings. If they miss expectations (which are only 1 cent per share), I think you'll see single digits.
I didn't have time to fully look into the company, is there some reason I should keep digging? Where is the hope?
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
... the decline in rare earth supply will cause companies to innovate, and they'll find ways to not use rare earths. Like... well.... like this Hitachi motor without rare earth metals: http://www.zdnet.com/hitachi-introduces-motor-without-rare-earth-2062304468/
"I'm so moist I'm sticking to the leather." -Kermit the Frog on The Late Late Show
I was really looking forward to hearing "One World" in Chinese http://www.discogs.com/Rare-Earth-One-World/master/142807
I was very specific in my criticism, which was directed at Romney (and to a lesser extent Bush). Of course, you are either mindlessly in thrall to Romney to just too thick to notice before you go on a hysterical "class warfare" rant.
Here's something for you to ponder. Numerically speaking, the majority of Romney's base is people on various kinds of Govt. asisstance. Republicans don't have a chance without welfare Red states, people on SS, etc. So you will be sorely disappointed if he gets elected and you think that will mean the end of "forced charity". The only difference is that in addition to being forced to give to the poor, you will be forced to give even more to the rich.
Romney thinks that dealing with the poor, grasping rabble is your problem, since he basically thinks you are one of them.
My understanding is that there is plenty of magnets to produce from the US, but it was severely impacted by environmental legislation. If China manages to restrict supplies, I would expect prices to go up and production should be profitable in the US (even with additional environment regulations). If the price goes up, then alternative production will resume.
In addition to investment in mining, other activities will become more valuable: R&D in producing substitutes, recycling methods, improved efficiency (making products work with less of this material as it becomes more expensive).
These comments are mine; I do not speak for my employer.
Driving up costs of imports from China will cut the profits of the many donors, and they will not take it quietly. There are also many practical reasons and it would have a similar effect on the economy as suddenly slapping an extra cost on fuel. It was a bad idea around 1200AD when what was left of the Roman empire (Constantinople/Byzantium) did the same thing to their main trading partner (Venice) and it's still a bad idea.
There's too much going on to be able to even find "imports that degrade locally derived businesses" which don't also help other "locally derived businesses".
It's funny that you are using US steel as an example, because that one is a textbook example of multiple industries being killed off by thoughtless use of tariffs and outright import bans. To elaborate on this, some decades back tariffs and bans on importation of general purpose steel were put in place to protect the US steel industry, which was functioning well at the time but did not want to be undercut by low quality imports. Without the threat of competition US steelmakers had no need to innovate and had the ability to increase prices. Eventually they got to the point where other countries could undercut US low quality general purpose steel with higher quality specially steels even after paying the tariffs - hence the "dumping" of steels with added nickel to make them stronger than general purpose steel and get around the ban. Making steel does not need many worker hours per ton so China should have had zero advantage, but a protected steel industry had gone to sleep and not only failed to improve, but also increased costs.
That was the direct effect. The indirect effect was the migration of industries that were heavy users of steel out of the USA so they would not be stung by the markup on steel prices from the cosy little club of US steelmakers (that was the start of the offshore outsourcing of manufacturing the USA is suffering so much from now). Eventually that protected little club found that their greed had backfired and they had very few customers. The only ones that thrived were innovating, making high strength steels, and able to compete effectively on a level playing field in an international market. I was in the steel industry briefly in the early 1990s (not in the USA and we could not sell our stuff to the USA), so got to see the how bad it had become.
Sugar is the other US textbook case of overprotecting an industry and the industry thinking that it's survival was thus assured and that they could charge whatever they wanted - hence you guys drinking corn syrup in your coke and mucking up your kids livers at twice the rate than if they were drinking sucrose in their coke.
In short, protecting industries can really suck in the long term and the protected industries can get to the point where they are welfare addicts that have no hope of survival without a government propping them up.
Well, most of us aren't smart enough to pick the bottom of the market.
Oh, it's not the bottom. You can't do that. It's the reversals. You look at prices and you see, say, a three white kings pattern--stock's up 4%, 6%, 3% in 3 days? Great! You know why it's up? People are buy-buy-buy! Then that fourth day you see it doji star... the price goes up, comes down, settles in the middle... or maybe you see a hammer, the price moves but there's only a tail on one side. In any case, suddenly the price isn't climbing a lot. Lucky you though, right? A chance to buy in before it continues rocketing up.
Yeah, right. It's peaking over. Sell that shit.
The exact same thing happens at the bottom. There's all these fancy patterns to try to predict the reversals in Japanese candlesticks, but when it's all over and done you can see smooth curves most of the time--prices rushing down, then slowly continuing down, then flattening, then reversing, like a parabola. Same thing going up.
That's ... great when you've decided to trade a stock. To decide if you want it though, yes, fundamentals. News (look, see this? This news will favor MCP and Hunter and such), earnings, company balance sheets and plans (you use these to PREDICT news; the company making money doesn't make you rich, it's the market sentiment on the stock price that controls the stock price. Spiraling, failing businesses can go through the roof).
Graph the company's price history divided by the S&P500: if it's >1.0, then it's growing faster than the market, and probably a good investment; if it's <1.0, it's growing slower than the market (even if it's going up, it's not going up as fast as the S&P), and thus a bad investment. A stock growing faster than the market has money flowing into it--more capital going there than everywhere on average. You'll see things like the financials (XLF) with XLF/SPY above 1.0 during the housing and mortgage boom, then you see it level off, then start heading below 1.0. All's well... then six months later, the banks collapse and the stock prices crash down hard. Why? Because during the boom, there's a lot of buying going on in Citi, Bank of America, etc that are "good investments," and less going to the tech market etc. When Wall Street thinks it's about to be over, they start to pull out--and all that capital goes elsewhere, the financial sector either grows slower or shrinks faster than the rest of the market, and the ratio drops below 1.0.
This thing with China, this is just news. It makes you think, hey, maybe I should watch MCP and Hunter. Maybe buy in on a low signal, protect yourself from losses (stop loss or short something as a hedge), see if MCP announces reopening a mine and gets some attention and becomes desirable. Make 40%, move your stop loss up, either sell out (in fear of China starting up production again) or wait (in hopes China starts up production and it goes nowhere and MCP dominates and you make 80%).
Stock market is too much of a mess for me to play in. Too much stress.
Support my political activism on Patreon.
he financial sector either grows slower or shrinks faster than the rest of the market, and the ratio drops below 1.0.
I have to admit that sector trading is my one dirty little technical trading habit. In general I go with fundamentals (even looking at dividend sometimes! What am I, a senior?), but I keep about 1/3 of my funds in sector ETFs, balanced 2-4 times per year, simply because they have been so good to me. One of those sectors, by the way, is often "cash" :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
It's not buying the ETF, really. Think about if you ran, say... put XLF:SPY on stockcharts.com, and it came up 1.2. Now look at C:XLF, BAC:XLF, UBS:XLF... same deal, the ones outrunning the sector in a sector outrunning the market? Those are your growth stocks.
Support my political activism on Patreon.
Well, I wouldn't really buy SPY... it's an index fund as opposed to a sector fund. Yeah, it's true that I'm probably giving up some gain and I'm paying fees, but it's much less work and I end up more diversified.
I mostly pick individual stocks, and may very well decide to buy a single stock in a particular fund. The ETFs are just a fun thing I do more on the side. This year it hasn't mattered much what I do - everything is up significantly. I'm easy to please and just try to stay modestly ahead of the S&P.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
"Diversification" is a ridiculous concept. It's like if you would just diversify your chances of losing are minimized... along with your chances of gaining. The ultimate diversification is to hold an S&P index tracker--hundreds of stocks in the market. But, then you hold exactly one security... wait, what? How is this different from buying them individually?
Diversification is a stupid core strategy. You need a real strategy; diversification is a side-effect. Hedging for example, people leverage various things against each other--short gold and buy oil, you're essentially buying oil in gold, you're assuming oil is going to gain value faster than gold and so you're taking X amount of gold, getting dollars for it, and buying oil with those dollars. You're buying oil in gold. Diverse holdings, because of strategy.
Think about all those people who lose money because they buy into a handful of good stocks and precious metals "for diversification" and then the silver market drops. Contrast that to people who buy in 3 different markets and had held gold until recently while it grew, then broke out when it leveled off (and is arguably going into decline) last year--they also had the mining companies (basic materials) and some other stuff. Why? Because a variety of things are good investments and they've diversified.
Buying an index fund (a sector fund is an index fund) is "diversification" like a consolidated debt object. Some good, some bad. The goal of the stock market is to de-diversify, to specify into only the undervalued so you can sell it when its value rises to correct.
Support my political activism on Patreon.
Well, diversification is not my goal - it's more of a side effect from my trading in ETFs. It happens to work a lot like a hedge in practice, so it is sufficient for my needs. If I had more time, I would absolutely pick individual stocks. Perhaps when I have more money invested I will be able to justify this, but at the moment I cannot.
Yeah, I realize I phrased the index/sector fund thing poorly. I meant that I'm not interested in general index funds (S&P, DJIA, NASDAQ Composite, etc). But I do like to invest in the index funds of particular sectors with money that would otherwise be sitting in cash waiting for me to find a good individual stock.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Would this not mostly just hurt Chinese interests? What, 90% of the electronics are made in china anyway? So assuming everyone pays the same, Chinese companies would be most hit by this change as I see it, as their bottom line would be going up...