Basic Materials Roundup: Market Talk

The latest Market Talks covering Basic Materials. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

1647 ET – Power supply outages in Western Australia extend Lynas’s rotten luck with its Kalgoorlie Rare Earths Processing Facility in Western Australia, notes Ord Minnett. Labor costs are high, local acid supply is scarce, power prices are expensive, and the grid is unreliable. “It is hard for Lynas to reduce costs in these circumstances,” analyst Matthew Hope says. Following Lynas’s assessment that the outages could result in a shortfall of one month’s production, Ord Minnett cuts a forecast for 2Q output of neodymium-praseodymium by 500 tons to 1,200 tons. Sales are likely to be 200 tons higher due to Lynas managing stockpiles. “Overall, we estimate the impact to free cash flow to be a A$30 million reduction to A$17 million in December quarter,” Ord Minnett says. It retains a sell call on Lynas.(david.winning@wsj.com; @dwinningWSJ)