A Disconnect Emerges: Lynas Shares Lag Behind Soaring Rare Earth Prices

The stock of Lynas Rare Earths is currently presenting a curious market puzzle. A powerful rally in the prices of the critical minerals it produces is coinciding with a period of relative underperformance for the company's shares, creating a notable divergence that has captured analyst attention.

The core of the story lies in the raw materials market. The price for neodymium-praseodymium oxide (NdPr), a vital component for the permanent magnets used in electric vehicle motors and wind turbines, surged to approximately 850,000 Chinese Yuan per tonne on February 10. This marks the commodity's highest price point since July 2022. This sharp increase is widely attributed to tightening market supply, driven by robust and growing demand from sectors including electric mobility, defense technology, and AI-powered robotics. Concurrently, Western governments are actively bolstering domestic supply chains through equity investments, offtake agreements, and new pricing mechanisms to reduce reliance on dominant producers.

Share Performance Tells a Different Story

This commodity strength stands in stark contrast to the equity's recent trajectory. While Lynas shares closed at AUD 15.76 on February 11, posting a daily gain of 4.10%, they have shown signs of lagging the underlying resource boom. Broader market factors are at play. Observers point to a wider correction across resource stocks following pullbacks in precious metals, coupled with lingering uncertainty regarding U.S. policy direction on critical minerals.

A recent note from investment bank Canaccord Genuity highlighted a shift in Washington's approach. While the commitment to developing non-Chinese supply chains remains firm, the strategy is evolving from broad price guarantees toward more selective investments, targeted tariffs, and specific purchase agreements.

Operational Snags and Financial Results

As the most significant producer of separated rare earths outside China, Lynas operates processing facilities in Australia and Malaysia and is progressing with downstream capacity expansion in the United States. The company's latest operational update revealed both progress and challenges.

Should investors sell immediately? Or is it worth buying Lynas?

For its second fiscal quarter ending December 31, 2025, Lynas reported a 43% jump in revenue to AUD 201.9 million. The average selling price realized was AUD 85.60 per kilogram, a significant increase from AUD 49.20 per kilogram in the prior-year period. However, production was hampered by power outages at its Kalgoorlie facility in Western Australia. Total rare earth oxide production fell to 2,382 tonnes, a substantial drop from the 3,993 tonnes achieved in the preceding quarter.

Analyst Outlook: A Tale of Two Narratives

The current dichotomy between firm commodity fundamentals and volatile equity prices defines the investment debate. Canaccord Genuity suggests the policy pivot toward supporting specific, strong projects could ultimately benefit well-positioned producers like Lynas. This more disciplined market intervention, analysts argue, may foster better market discipline and pave the way for more stable long-term pricing.

Despite a year-to-date gain of roughly 26.69% and an impressive 128% surge over the past twelve months, the immediate path for Lynas stock appears caught between operational execution and macro-level policy shifts, all while the minerals it mines command near three-year highs.

Ad

Lynas Stock: New Analysis - 12 February

Fresh Lynas information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Lynas analysis...