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Graphite Outlook 2022: Demand from Battery Segment to Remain High

Click here to read the previous graphite outlook. Graphite is an essential raw material used in electric vehicle (EV) batteries, and as sales of EVs grow, market watchers believe demand for the metal will surge. Despite discussions about battery chemistry

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Click here to read the previous graphite outlook.

Graphite is an essential raw material used in electric vehicle (EV) batteries, and as sales of EVs grow, market watchers believe demand for the metal will surge.

Despite discussions about battery chemistry changes, many experts think graphite will remain a dominant element in EV batteries for at least the next decade. Both synthetic graphite and natural graphite, in the form of the intermediate product spherical graphite, are used in the anodes of lithium-ion batteries.

Here the Investing News Network (INN) looks at the key trends in the graphite market in 2021 and what the graphite outlook is for 2022.


Graphite trends 2021: Shipping and power cost challenges


After a tumultuous 2020 in which supply chains were put to the test as economies shut down due to the coronavirus pandemic, graphite kicked off 2021 on a bright note.

In early 2021, prices for natural flake graphite were slightly higher than expected as a result of unexpectedly strict environmental investigations and closures in China, Suzanne Shaw of Wood Mackenzie told INN back in July.

“There was also considerable shipping disruption early on in the year with containers and vessels not where they should be as routes reopened post-COVID,” she said. “Limited availability was prioritized for higher-value cargos, with lower-value raw materials flows disrupted. This situation subsided through Q2.”

Pricing was relatively flat during the first six months of 2021, according to Benchmark Mineral Intelligence data.

“Prices for +100 mesh flake concentrate, across all purities, have moved upward by around 5 to 10 percent year-to-date, while pricing for all other grades has moved less than 5 percent so far this year due to continued structural oversupply in the graphite market,” Miller told INN at the end of H1. “Moreover, the global shipping situation at the moment is hindering upward price pressure.”

Prices took a turn in August, jumping on the back of the energy crisis, which hit producers and disrupted output. Battery grades were particularly hit by rising power costs as both the manufacture of synthetic graphite and the processing of spherical graphite from natural flake are known for their high levels of energy consumption.

In terms of supply, Chinese production was expected to ramp up to meet rising domestic battery demand, as there is still a lot of overcapacity in China.

“However, the overall trend is that China is showing less appetite on the raw material side and investing in higher-value downstream industries rather than exploration/mining across most mineral sectors,” Shaw said at the end of H1. “It will continue to increase its own imports of flake graphite.”

Meanwhile, on the synthetic graphite front, the market could be driven into a deficit as a result of increasing demand from the lithium-ion battery and downstream EV sectors worldwide, Roskill, which was acquired by Wood Mackenzie, reported back in August.

“From a performance perspective, EV automakers prefer synthetic graphite, citing its superior fast charge turnaround and battery longevity,” a November Fastmarkets report reads. “Synthetic graphite, however, is costly, power intensive and environmentally unfriendly, with supply centered in China at odds with North American and European automakers’ desire for more localized supply.”

Graphite outlook 2022: What’s ahead


At the end of last year, analysts were expecting demand from the battery segment to continue to grow on the back of increased EV sales, with growth opportunities for both synthetic and natural graphite.

According to Benchmark Mineral Intelligence data, demand for natural graphite from the battery segment amounted to 400,000 tonnes in 2021, with that number expected to scale up to 3 million tonnes by 2030. Meanwhile, demand for synthetic graphite reached about 300,000 tonnes in 2021 and it’s expected to increase to 1.5 million tonnes by 2030.

“We do expect recycling to plug some of these gaps, but this isn't really likely to reach the necessary scale until post 2030,” Miller said in a December webinar. “So at the moment, the focus is really on synthesizing and mining this material as quickly as possible to meet the demand that we might see into the future.”

By volume, graphite is one of the most important elements in any electric vehicle battery ― there is between 50 and 100 kilograms of graphite, whether synthetic or natural, present within each vehicle.

“We can really see the sector growing progressively to around 15 times the demand we see today by 2030, outpacing moderate growth and demand from industrial applications,” Miller said.

That said, it's important to note that only certain types of natural graphite supply are relevant to and able to be qualified for the lithium-ion supply chain.

“This is really the biggest challenge in using natural graphite as a battery input,” Miller said. “This has the potential to exclude further capacity from projects in development.”

The expert explained that if all planned supply reached the market, it would have the potential to balance out demand up to 2029 to 2030, but with these limitations on which material can be qualified, the story takes a different direction.

“The primary limitation here is the mesh size inputs for the battery supply chain must be fine to medium flake,” Miller said, adding that consistency and high purity, somewhere around 94 to 95 percent carbon, is also key. “Flake graphite for the lithium ion supply chain must have low levels of impurity in order to avoid compromising the quality and longevity of the end product.”

According to Benchmark Mineral Intelligence, today, synthetic graphite anodes make up the majority of market share and approximately 57 percent of the anode market.

“Going forward, we do expect this to shift in the direction of natural graphite anodes to around a 50-50 balance for a multitude of reasons,” Miller said. His reasons include tight graphitization capacity, higher costs for synthetic graphite anode material and also the environmental shortcomings of the synthetic graphite supply chain at the moment.

Graphitization is the process of producing synthetic graphite from carbon-rich, oil-derived feedstock raw materials, and this process is energy intensive.

“In China, graphitization capacity has been mainly located in Inner Mongolia, a province which has some of the lowest energy costs in the country and where other high-energy metal producers, such as ferro-chrome smelters, are based,” Fastmarket reports. “But Inner Mongolia was the first in the firing line when the 2021 energy crisis unfolded.”

This resulted in reduced production and unpredictable cost increases for synthetic graphite, and the reason why many battery manufacturers in China could turn to natural graphite instead.

Looking ahead at how overall demand for graphite will perform, Benchmark Mineral Intelligence expects the battery segment to challenge industrial applications as the leading end-market for graphite demand. Over the next decade, anode demand will grow at an average of 27 percent compound annual growth rate (CAGR).

“Unlike some of the other critical mineral markets, there is still time for both the natural and synthetic graphite market deficits to be redressed — so long as adequate funding is provided for junior miners in the near term,” Miller said.

Commenting on price performance, Fastmarkets maintains the view that both flake and spherical graphite prices will trend stable to higher in the near term.

“The only potential reprieve we see for graphite prices would be if the power constraints diminish EV lithium-ion battery production, and in turn reduce demand for graphite anodes sufficiently to stem the upward pressure on graphite prices,” analysts said.

Another key trend for graphite investors to watch in the new year is how western automakers keep up with China, which has become the dominant player in all steps of the anode supply chain.

Interestingly, before 2021 came to an end, US-based Tesla (NASDAQ:TSLA) made a move to secure graphite supply from top graphite producer Syrah Resources (ASX:SYR).

The ASX-listed company will process graphite from its Balama mine in Mozambique in its Louisiana plant, and will supply the EV maker with anode graphite material for an initial four year period. Tesla also has an option to offtake additional volume subject to Syrah expanding its capacity beyond 10,000 tonnes per year.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Economics

5 Top Consumer Stocks To Watch Right Now

Are these consumer stocks a buy amid the earnings season?
The post 5 Top Consumer Stocks To Watch Right Now appeared first on Stock Market News, Quotes,…

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5 Trending Consumer Stocks To Watch In The Stock Market Now         

As we tread through the earnings season, consumer stocks could be worth watching in the stock market this week. This would be the case since a number of big consumer names such as Costco (NASDAQ: COST) and Macy’s (NYSE: M) will be posting their financials for the quarter. As such, investors will be keeping an eye on these reports for clues on the strength of consumer spending amid this period of high inflation.

However, despite the soaring prices across the economy, it seems that consumers are surprisingly showing resilience. According to the Commerce Department, retail sales in April outpaced inflation for a fourth straight month. This could suggest that consumers as a whole were not only sustaining their spending, but spending more even after adjusting for inflation. Ultimately, it could be a reassuring sign that consumers are still supporting the economy and helping to diminish the narrative of an incoming recession. With that being said, here are five consumer stocks to check out in the stock market today.

Consumer Stocks To Buy [Or Sell] Right Now

Nordstrom

retail stocks (JWN stock)

Starting off our list of consumer stocks today is Nordstrom. For the most part, it is a fashion retailer of full-line luxury apparel, footwear, accessories, and cosmetics among others. The company operates through multiple retail channels, boutiques, and online as well. As it stands, Nordstrom operates around 100 stores in 32 states in the U.S. and three Canadian provinces.

Yesterday, the company reported its financials for the first quarter of 2022. Starting with revenue, Nordstrom pulled in net sales worth $3.47 million for the quarter. This marks an increase of 18.7% from the same quarter last year. Its Nordstrom banner saw net sales rise by 23.5% year-over-year, exceeding pre-pandemic levels. Next to that, its Nordstrom Rack banner saw a 10.3% increase in net sales from last year. Besides, net earnings were $20 million, with earnings per share of $0.13 for the quarter. Considering Nordstrom’s solid quarter, should you invest in JWN stock?

[Read More] Best Stocks To Invest In Right Now? 5 Value Stocks To Watch This Week

The Wendy’s Company

best consumer stocks (WEN stock)

Next up, we have The Wendy’s Company. For the most part, it is the holding company for the major fast-food chain, Wendy’s. Being one of the world’s largest hamburger fast-food chains, the company boasts over 6,500 restaurants in the U.S. and 29 other countries. The chain is known for its square hamburgers, sea salt fries, and the Frosty, a form of soft-serve ice cream mixed with starches. WEN stock is rising by over 8% on today’s opening bell.

According to an SEC filing, Wendy’s largest shareholder, Trian Partners, is looking into making a potential deal with the company. Trian said that it is considering a deal to “enhance shareholder value.” Also, the firm adds that this could lead to an acquisition or business combination. In response, Wendy’s stated that it is constantly reviewing strategic priorities and opportunities. It added that the company’s board will carefully review any proposal from Trian. Given this piece of news, will you be watching WEN stock?

[Read More] 4 Semiconductor Stocks To Watch In The Stock Market Today

Foot Locker

FL stock

Another stock investors could be watching is the shoes and apparel company, Foot Locker. In brief, the company uses its omnichannel capabilities to bridge the digital world and physical stores. As such, it provides buy online and pickup-in-store services, order-in-store, as well as the growing trend of e-commerce. Some of its most notable brands include Eastbay, Footaction, Foot Locker, Champs Sports, and Sidestep. Last week, the company reported its results for the first quarter of the year.

For starters, total sales came in at $2.175 billion, a slight uptick compared to sales of $2.153 billion in the year prior. Next to that, Foot Locker reported a net income of $133 million. Accordingly, adjusted earnings per share came in at $1.60, beating Wall Street’s expectations of $1.54. CEO Richard Johnson added, “Our progress in broadening and enriching our assortment continues to meet our customers’ demand for choice. These efforts helped drive our strong results in the first quarter, which will allow us to more fully participate in the robust growth of our category going forward.”  As such, is FL stock one to add to your watchlist? 

Tyson Foods 

TSN stock

Tyson Foods is a company that built its name on providing families with wholesome and great-tasting protein products. Its segments include Beef, Pork, Chicken, and Prepared Foods. With some of the fastest-growing portfolio of protein-centric brands, it should not be surprising that TSN stock often comes to mind when investors are looking for the best consumer stocks to buy. 

Earlier this month, Tyson Foods provided its fiscal second-quarter financial update. The company’s total sales for the quarter were $13.1 billion, representing an increase of 15.9% compared to the prior year’s quarter. Meanwhile, its GAAP earnings per share climbed to $2.28, up 75% year-over-year. According to Tyson, these financial figures are a reflection of the increasing consumer demand for its brands and products. To top it off, the company was also able to reduce its total debt by approximately $1 billion. Thus, does TSN stock have a spot on your watchlist?

[Read More] Stock Market Today: Dow Jones, S&P 500 Rise, Wendy’s Stock Gains On Potential Deal

DoorDash

food delivery stocks (DASH Stock)

DoorDash is a consumer company that operates an online food ordering and delivery platform. In fact, it is one of the largest delivery companies in the U.S. and enjoys a huge market share. The company connects hundreds of thousands of merchants to over 25 million consumers in the U.S., Canada, Australia, and Japan through its local logistics platform. Accordingly, its platform allows local businesses to thrive in today’s “convenience economy,” as the company puts it.

On May 5, the company reported its first-quarter financials for 2022. Diving in, it posted a revenue of $1.5 billion, growing by 35% year-over-year. This was driven by total orders that grew by 23% year-over-year to $404 million. Along with that, it reported a GAAP gross profit of $662 million, an increase of 34% year-over-year. The company said that it added more consumers than any quarter since Q1 2021, due in part to the growth of its DashPass members. The growth in Monthly Active Users and average order frequency has helped it gain share in the U.S. Food Delivery category this quarter as well. Given DoorDash’s performance for the quarter, should you watch DASH stock?

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The post 5 Top Consumer Stocks To Watch Right Now appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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Economics

Finding Shelter in an Inverse ETF

As the old saying goes, “What goes up must come down.” Indeed, up until the recent selling wave caused by Russia’s war against Ukraine and the continued…

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As the old saying goes, “What goes up must come down.”

Indeed, up until the recent selling wave caused by Russia’s war against Ukraine and the continued effects of supply chain disruptions amid the COVID-19 pandemic, tech stocks, including semiconductors, were the darlings of the investment world. That is, it seemed as if the sky-high valuations of some tech stocks were sustainable in an atmosphere of seemingly perpetual growth.

That, of course, was not the case, and the too-good-to-be-true valuations were quickly brought down to earth by the forces of inflation and tight monetary policy. As a result, the tech-heavy Nasdaq entered a free-fall that has not yet found a bottom.

At the same time, that does not mean that we should abandon the sector as a lost cause. One such way to play the sector during its downhill slide is the exchange-traded fund (ETF) Direxion Daily Semiconductor Bear 3X Shares (NYSEARCA: SOXS).

As its title suggests, this is an inverse ETF, meaning that it is built to go up in value when its parent index goes down. Specifically, SOXS provides three times leveraged inverse exposure to a modified market-cap-weighted index of semiconductor companies that trade in American markets by using swap agreements, futures contracts and short positions.

While the index’s holdings are weighted by market capitalization, the fund’s managers cap the weights of the top five securities in the portfolio at 8% each. The weight of the remaining securities is capped at 4% each.

As of May 24, SOXS has been up 0.37% over the past month and up 24.73% for the past three months. It is currently up 60.47% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $258.15 million in assets under management and has an expense ratio of 1.01%.

In short, while SOXS does provide an investor with a way to invest in an inverse ETF, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

The post Finding Shelter in an Inverse ETF appeared first on Stock Investor.

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Stocks

Will Albertsons outperform due to its high return on equity for low beta?

Albertsons Companies Inc. (NYSE:ACI) is trading at $29. The stock has risen 81.25% from the IPO in the last quarter of 2020. In the two years since going…

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Albertsons Companies Inc. (NYSE:ACI) is trading at $29. The stock has risen 81.25% from the IPO in the last quarter of 2020. In the two years since going public, Albertsons Companies paid dividends each quarter. The annual dividend currently stands at $0.48, with a yield of 1.64%.

Albertsons is rated high on both value and growth. The company’s heritage has been built over the years since its founding in 1939. Today, the company is the second-largest traditional grocer in the US.

The company went public during a pandemic to fund new growth opportunities. However, it faces the headwinds of inflation and bear markets. Despite pressures, Albertsons will be among the few stocks that will outperform the market.

The ROE stands at 74.48%. This is a fundamental strength that should make investors troop to Albertsons. The EPS is at $2.8 and growing at more than 6.13%. At the valuation of $29, the PE is just about 10. All this for a beta of only 0.3, indicating a low risk.

Albertsons has support at $26.80 and resistance at $36.75

Source – TradingView

Albertsons has support at $26.80. This week, the stock has been bullish, having gained 7.82%. It is among a handful of stocks that have been braving the bear markets. This analysis projects that the stock will face some resistance at $36.75. However, it would break out at the next earnings release on July 28. If an investor were to take a position today, there is the likelihood of enjoying significant gains by the next earnings call.

Summary

Albertsons is an attractive value and growth stock. The share is trading at $29 with a price target of $36 by the end of July. Albertsons is also emerging as an attractive dividend stock.

The post Will Albertsons outperform due to its high return on equity for low beta? appeared first on Invezz.

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