Why China Has Lost The Rare Earths War: The Power of Markets

(BEIJING) — China’s biggest rare earths producer has suspended output in an effort to shore up slumping prices of the materials used by makers of mobile phones and other high-tech products. 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 the rare earths market. It gave no indication when production would resume and phone calls to Baogang were not answered.

By TradersHuddle:It seems like only yesterday that rare earths, the 17 members of the periodic table of elements that aren't all that rare, were all the rage. Legitimate fundamental arguments could be made for investing in rare earth stocks such as Molycorp (MCP), the largest U.S.-based rare earths miner.

By Tom Lydon: The exchange traded fund that follows the rare earths metal industry is recovering along with the improved economic outlook. Rising demand for rare earths could help make this ETF a rare opportunity.

Jeb Handwerger submits: By Jeb Handwerger

Peasant farmer Wang Tao used to grow corn, potatoes and wheat within a stone's throw of a dumping ground for rare earths waste until toxic chemicals leaked into the water supply and poisoned his land.Farmers living near the 10-square-kilometre expanse in northern China say they have lost teeth and their hair has turned white while tests show the soil and water contain high levels of cancer-causing radioactive materials.

David Fessler submits:By David Fessler The huge global wall of worry over China’s dominance of the rare earth market is certainly warranted if you’re the CEO of one of the thousands of companies around the world that depend on such material.

William Kabourek submits:Scarcity generally does lead to higher prices. But one still has to be careful. In the case of rare earth minerals, I'm afraid Alfred is going to be correct once more. Speculators are pushing any and all rare earth related stocks skyward with no regard for logic and financial analysis.