Rare Earths - No Good News Goes Unpunished

More news out of China today on rare earth quotas.  Quotas are getting cut (again) which will shrink supply.  Normally, I would expect this to be greeted with REE stocks a jumping like sailfish.  Today, a jump then a dive.

(Reuters) China's Commerce Ministry said on Wednesday it would not issue more export quotas for foreign companies as it did last year and the first set of volume totaling 14,446 included those for foreign firms.

That means China's first batch of export quotas for rare earth fell by 35 percent as compared with the volume issued a year-ago.

In March, the ministry issued 5,978 tons of quotas for foreign companies, in addition to 16,304 tons of the first batch of 2010 export quotas issued to Chinese companies in late 2009.

"We have included the volume (for foreign firms) in the first batch of quotas and will do so in future," said one official with the ministry's export division of industry products. He said the ministry will issue more rare earth export quotas for this year, but declined to give the total volume.

The ministry said it has not decided full-year rare earth export quotas and urged concerned parties not to estimate full-year quotas by just looking at the first set of quotas, in an apparent move to soothe market concerns.

So the reaction (in terms of Molycorp -MCP):

Spike - splashdown.