HEG, Graphite India See Major Stock Gains as China
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Posted On: 12/06/2024 5:14:01 PM
HEG, Graphite India See Major Stock Gains as China’ Graphite Export Curbs Expand
Earlier this week, the Chinese government announced a ban on the export of gallium and germanium to the United States. The announcement by the Chinese government was made in response to America imposing new export restrictions that target the East-Asian country’s ability to manufacture advanced semiconductors.
This crack down affected more than 100 Chinese firms, including SiCarrier and Piotech, which manufacture advanced chips. The East-Asian country has also made the decision to apply a stricter review of its graphite exports to America.
This has seen share prices for top graphite electrode manufacturers in India surge, with investor interest in Graphite India Limited and HEG Limited increasing significantly. This is the highest gain in shares for HEG in two months and for Graphite India in almost three months.
HEG recently concluded the expansion of its graphite electrode plant’s capacity to 100,000 tons, a feat that makes it the biggest plant in the western world. The company hopes that increasing the plant’s capacity will yield cost advantages over other major producers of graphite.
During the September quarter, the company was logging 80% utilization of capacity, which is the highest globally. It hopes to remain operating at this rate for the remainder of the year, noting that with decarbonization becoming more popular, it is in a better position to benefit from the new capacities that have been added.
During its recent earnings call, HEG Vice Chairman Ravi Jhunjhunwala revealed that the company had been exporting roughly two-thirds of its production to over 25 countries for an extended period of time.
He also noted that the company was well-positioned to meet the growing demand for graphite globally. In addition to this, he explained that if the firm obtained subsidies for its projects from the state government, its project payback would reduce to 6 years. Without subsidies though, then payback would increase to 9-10 years, implying a lower rate of return.
Prior to this recent news, it was facing decreased demand globally, which put its pricing power under pressure.
Data from Graphite India also shows that India is a big growth driver of steel demand. This is primarily driven by investments across sectors that consume steel. KK Bangur, the Chairman of Graphite India, expects that the company will continue benefitting from the adoption of electric arc furnace manufacturing processes by the steel industry as more countries around the world implement decarbonization strategies.
Aside from Graphite India and HEG, there is a pair of other producers that have almost double the capacity of these graphite companies. These are Resonac, formerly known as Showa Denko; and GrafTech International, formerly known as Union Carbide.
As other entities like Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) progress in the development of new graphite mines, the supply gap created by the Chinese export restrictions will be more than covered.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
Earlier this week, the Chinese government announced a ban on the export of gallium and germanium to the United States. The announcement by the Chinese government was made in response to America imposing new export restrictions that target the East-Asian country’s ability to manufacture advanced semiconductors.
This crack down affected more than 100 Chinese firms, including SiCarrier and Piotech, which manufacture advanced chips. The East-Asian country has also made the decision to apply a stricter review of its graphite exports to America.
This has seen share prices for top graphite electrode manufacturers in India surge, with investor interest in Graphite India Limited and HEG Limited increasing significantly. This is the highest gain in shares for HEG in two months and for Graphite India in almost three months.
HEG recently concluded the expansion of its graphite electrode plant’s capacity to 100,000 tons, a feat that makes it the biggest plant in the western world. The company hopes that increasing the plant’s capacity will yield cost advantages over other major producers of graphite.
During the September quarter, the company was logging 80% utilization of capacity, which is the highest globally. It hopes to remain operating at this rate for the remainder of the year, noting that with decarbonization becoming more popular, it is in a better position to benefit from the new capacities that have been added.
During its recent earnings call, HEG Vice Chairman Ravi Jhunjhunwala revealed that the company had been exporting roughly two-thirds of its production to over 25 countries for an extended period of time.
He also noted that the company was well-positioned to meet the growing demand for graphite globally. In addition to this, he explained that if the firm obtained subsidies for its projects from the state government, its project payback would reduce to 6 years. Without subsidies though, then payback would increase to 9-10 years, implying a lower rate of return.
Prior to this recent news, it was facing decreased demand globally, which put its pricing power under pressure.
Data from Graphite India also shows that India is a big growth driver of steel demand. This is primarily driven by investments across sectors that consume steel. KK Bangur, the Chairman of Graphite India, expects that the company will continue benefitting from the adoption of electric arc furnace manufacturing processes by the steel industry as more countries around the world implement decarbonization strategies.
Aside from Graphite India and HEG, there is a pair of other producers that have almost double the capacity of these graphite companies. These are Resonac, formerly known as Showa Denko; and GrafTech International, formerly known as Union Carbide.
As other entities like Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) progress in the development of new graphite mines, the supply gap created by the Chinese export restrictions will be more than covered.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
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