Lynas Shares Face Persistent Headwinds Amid Operational Setbacks

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Lynas Rare Earths Ltd. finds itself navigating sustained pressure as its shares underperform the broader Australian market. The company, a key producer of rare earth elements, is contending with a combination of operational disruptions and a deteriorating technical chart outlook, overshadowing its longer-term strategic significance.

In the latest trading session, Lynas equity closed at AUD 12.22, marking a daily decline of 1.77% or AUD 0.22. This loss stands in contrast to the S&P/ASX 200 index, which managed a 0.15% gain to finish at 8,727.80 points. On a weekly basis, the stock's decline of approximately 2.78% further highlights its weakness relative to many peers in the materials sector. This divergence from a generally positive market indicates investor concerns are specific to the company's near-term prospects.

Operational Disruptions Weigh on Sentiment

The immediate catalyst for the selling pressure stems from ongoing operational challenges. Significant power supply issues at the Kalgoorlie Rare Earths Processing Facility are at the forefront of these problems.

The ramifications are multi-faceted:

• Production Shortfall: The interruptions have resulted in an estimated production deficit equivalent to roughly one month's output for the affected quarter.
• Downstream Impact: Reduced feedstock from Kalgoorlie is hampering production at the company's Malaysian refinery, specifically limiting the output of Mixed Rare Earth Carbonate (MREC).
• Scheduled Maintenance: Compounding the issue, a major planned maintenance shutdown is currently underway in Malaysia, restricting the ability to quickly recoup the lost production volumes in the short term.

Management is utilizing off-grid power solutions to maintain operations at Kalgoorlie. While the company aims to recover the lost volumes by the end of the fiscal year in June 2026, the near-term uncertainty continues to be reflected in the share price movement.

Technical Picture Points to Continued Weakness

From a chart analysis perspective, the equity remains in a fragile state. Technical assessments point to a "Strong Sell" signal across multiple timeframes.

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

Key technical observations include:

• The share price is trading below crucial moving averages, including the 50- and 200-day lines, signaling a firmly established downtrend.
• The Relative Strength Index (RSI) sits around 31, approaching oversold territory.
• A breach of the previous support level near AUD 12.50 has opened the door for further declines into lower price ranges, barring a swift improvement in market sentiment.

Although the depressed RSI could theoretically support a technical rebound, clear positive catalysts are currently absent.

Long-Term Strategy and Market Position

Despite the near-term challenges, the long-term investment narrative for Lynas presents a more optimistic tone. Recent analyst publications suggest the company has the potential to double its revenue by 2026. This projection is based on two key factors:

• an anticipated recovery in rare earth prices, particularly for Neodymium-Praseodymium (NdPr)
• the ramp-up of additional production capacity

Furthermore, Lynas was recently added to the S&P/ASX 50 Index, effective from the end of December 2025. This inclusion underscores the firm's status as a large-cap resource player and its pivotal role as the most significant producer of rare earths outside China within the context of Western supply chain strategies.

For the immediate future, however, stabilizing operations at Kalgoorlie and meeting production targets for the current fiscal year are critical. Success on these fronts could help mitigate the present operational setbacks and weak technical posture as the year progresses.