MP Materials shares are experiencing a notable increase in premarket trading on Tuesday, following an almost 8% surge on Monday. This upswing coincides with renewed trade discussions between the U.S. and China, focusing particularly on the restrictions surrounding the trade of rare-earth metals—an area where China holds a significant market advantage.
These rare-earth materials are integral to the manufacturing of various high-tech products, including electric vehicles, smartphones, and laptops. Recent reports indicate that trade representatives from both nations commenced discussions in London on Monday, with a focus on technology transfer and rare-earths trade.
Tensions had previously escalated in April when China imposed export restrictions on certain minerals destined for the U.S., prompting American officials to prioritize the lifting of these limits during the current negotiations. Former President Trump remarked last week on the challenges of reaching an agreement with Chinese President Xi Jinping, labeling negotiations as “extremely hard.”
Following a robust performance that saw shares of MP Materials increase nearly 8% on Monday, the stock saw an additional 3% rise before the market opened on Tuesday. In fact, the stock has surged about 50% since dipping to a four-month low of $18.77 on May 27.
The uptick in MP Materials and fellow rare-earth producer USA Rare Earth (USAR) can be attributed to a heightened emphasis on domestic production and stockpiling of these essential materials, driven by national security concerns and a strategy to reduce dependency on China.
This situation presents a significant opportunity for MP Materials as the dialogue between the U.S. and China progresses, potentially leading to a more stable and favorable trading environment for rare-earth materials.