💥 After Tet, now I have a little free time, so besides technical analysis, there are also various topics to share with everyone: there's the discussion "Relaxing while waiting for a sideways market", and a knowledge series "your questions, our answers"...😁 But for over a month now I've been too busy, so I can only outline the price trajectory and remind everyone to limit risks.
💥 Now the market is standing still, I'm writing about RARE EARTHS, to give everyone another perspective. It's the only thing of significance on the negotiation table between the US and China recently. Why is that???
💥 This is a strategically important field regarding high technology, electric vehicles, defense, and energy transition.
China controls ~70% of extraction, 85–90% of refining, and ~90% of global permanent magnet production.
-->> It's not that the US and Europe don't have rare earths or can't extract them. Western countries have always been very concerned about the environment. The extraction and refining processes would destroy the environment, and companies outside have to spend large amounts to conduct it, as well as to handle pollution.
-->> In contrast, China's production costs are low due to cheap labor + government support in funding and policy a lot. And they trade off having the largest market share in the world for many "cancer villages" due to environmental destruction.
💥 China's restriction on exports has disrupted the supply chain in the automotive, EV, and defense sectors in the US & Europe, forcing them to strengthen investments & policies to reduce dependence.
-->> The US, EU, UK... are building a chain from extraction to refining to achieve independence by 2027–2030.
💥 Not only macro policies but the Trade War has also temporarily paused as expected: the US is in the "upper hand", as I noted back in April. Everyone can read again a few articles I shared.
China is subject to tariffs of 30%-55% on exported goods to the US. While American goods entering China only face a 10% tariff. They really need chip design software from the US and visas to Harvard 😁