Molycorp Falls as JPMorgan Cuts Rating on Rare-Earth Decline
Molycorp Inc. (MCP), the owner of the world’s largest rare-earth deposit outside China, fell the most since its 2010 initial public offering after JPMorgan Chase & Co. lowered its rating, citing declines in rare-earth prices.
Molycorp dropped $11.56, or 22 percent, to $41.45 at 4:02 p.m. in New York Stock Exchange composite trading. The shares began trading in July 2010.
JPMorgan cut its recommendation to “neutral” from “overweight,” Michael Gambardella, a New York-based analyst, said in a report today. JPMorgan lowered its price target for Molycorp to $66 from $105.
Rare earths, a group of 17 elements used in electronics and magnets, have dropped in price because of selling by speculators, Gambardella said. Molycorp, based in Greenwood Village, Colorado, was the best-performing U.S. IPO last year, more than tripling after rare-earth prices soared as China cut export quotas.
“A large part of this year’s run up and recent drop was caused by a host of players in China speculating on rare earth oxides,” Gambardella said in the note. “We are taking a more cautious stance.”
Cerium oxide has dropped 30 percent since its peak in June, according to data compiled by Bloomberg. Lanthanum oxide and neodymium oxide prices have also fallen, according to the data.
China accounted for more than 90 percent of rare-earth output in 2009 and more than half of its consumption, U.S. government data show.
To contact the reporters on this story: Arie Shapira in New York at ashapira3@bloomberg.net; Simon Casey in New York at scasey4@bloomberg.net
To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net
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