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Three Strategic Defense Stocks to Buy as China and Russia Try to Expand Their Turf

Three strategic defense stocks to buy as China and Russia seek to expand their territorial claims at the expense of other nations should continue to find their products and services in demand by the U.S. government and its allies. The three strategic…

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Three strategic defense stocks to buy as China and Russia seek to expand their territorial claims at the expense of other nations should continue to find their products and services in demand by the U.S. government and its allies.

The three strategic defense stocks to buy feature consulting firms, contractors and cutting-edge capabilities such as artificial intelligence and cybersecurity. Those three strategic defense stocks to buy are fortified by having the U.S. government as a key customer that offers the companies dependable revenues and growth, as well as a 246-year track record of paying its bills.

Despite the emergence of a new COVID-19 variant, Omicron, the three strategic defense stocks to buy should show resiliency as the U.S. government and its allies seek to maintain military preparedness as threats mount from China, Russia, North Korea and Iran, among other countries. In recent weeks and months, China, Russia, North Korea and Iran have gained international notoriety for aggressive military actions and statements from government leaders who are raising concerns in nearby nations.

Threatening Actions Underscore Value of Three Strategic Defense Stocks to Buy

With bipartisan support, the U.S. House of Representatives passed the National Defense Authorization Act (NDAA) to boost spending to roughly $740 billion. China’s defense spending is murky due to its leaders’ secrecy, but the Stockholm International Peace Research Institute (SIPRI) estimates the country in 2020 accounted for 13%, or about $252 billion, of the world’s $1.981 trillion in global military spending. The United States totaled 39%.

When adjusted for military purchasing power parity (PPP), China’s defense spending is 55-75% of what the United States funds, wrote Ronald Epstein, a defense and aerospace analyst with BofAmerica Global Research. However, defense spending does not directly equal military power, since intangibles such as alliances, modernization of equipment, unmanned vehicles and original technologies rather than acquired intellectual property are part of it.

China’s military expenditure ranks second in the world, rising 1.9% from 2019 and 76% over the decade 2011–20, according to the SIPRI. China’s military spending has risen for 26 consecutive years, the longest series of uninterrupted increases by any country in the SIPRI Military Expenditure Database.

A recent dip in defense stock valuations overlooks a fundamental shift as the market has been focused on short-term budgetary concerns and COVID-19, Epstein wrote. He predicts defense stocks will do well in the next few years.

Ronald Epstein, BofA defense analyst. Image courtesy of Bank of America.

Russian Troops at Ukraine’s Border May Fuel Three Strategic Defense Stocks to Buy

Ukraine’s military intelligence recently reported that Russia had more than 92,000 troops massed around its borders, Ukrainian forces were preparing for an attack by the end of January or beginning of February, even though Russia’s foreign intelligence chief said such reports were “malicious U.S. propaganda.” However, he did not explain why nearly 100,000 Russian troops were placed along Ukraine’s border.

Wall Street veteran Bryan Perry, who leads the high-yield-focused Cash Machine investment newsletter and the Premium IncomeQuick Income TraderBreakout Profits Alert and Hi-Tech Trader services, said investors have received a “double dose” of bad news in the past week. The potentially dangerous Omicron variant of COVID-19 accounted for one big risk, while Nov. 30 remarks by Fed Chairman Jerome Powell to a Senate subcommittee caused the other.

Powell told members of the subcommittee that the U.S. central bank may speed up its tapering of stimulus and raise short-term rates thereafter. All 11 sectors traded lower after his Nov. 30 remarks, with the major averages taking out Friday’s lows by midday, Perry pointed out.

“Even as Powell is taking a more aggressive tone, bond yields are moving lower in a flight to safety with the dollar holding up near its 14-month high,” Perry said.

Paul Dykewicz interviews Bryan Perry about investing opportunities.

Governments seem to be overreacting to the newly discovered Omicron variant of the COVID-19 as they typically do by shutting down air travel and imposing more vaccination and mask-wearing mandates, said Mark Skousen, PhD, a descendant of Benjamin Franklin and the leader of the Forecasts & Strategies investment newsletter. Skousen, who also heads the Home Run TraderFive Star TraderTNT Trader and Fast Money Alert advisory services, added that those actions have “spooked the bull market” on Wall Street and caused a selloff.

Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz in Philadelphia. Skousen’s premium investment services consist of Home Run Trader, Five Star Trader, TNT Trader and Fast Money Alert.

Three Strategic Defense Stocks to Buy Include Booz Allen Hamilton

McLean, Virginia-based Booz Allen Hamilton Holding Corporation (NYSE: BAH), the parent company of management and technology consulting and engineering services firm Booz Allen Hamilton Inc., has spent more than 100 years helping military, government and business leaders solve complex problems. As a consulting firm, the company has experts in defense, analytics, digital solutions, engineering and cyber to serve as a key partner on some of the most innovative programs for governments and their most sensitive agencies.

BofA’s buy rating and $105 price objective on Booz Allen Hamilton is based on a 1.2x relative enterprise value (EV) / earnings before interest, taxes, depreciation and amortization (EBITDA) multiple to the investment firm’s multiple for the defense prime contractors based on 2023 estimates.

“This equals a 16x EV/EBITDA multiple,” according to BofA’s Epstein. “We believe a premium to the defense primes factors in strong U.S. National Security demand for innovative technologies and solutions, and shareholder friendly capital deployment.”

Risks to achieving the price target include cuts to the U.S. Department of Defense (DoD) budget versus what is anticipated, Epstein wrote in a recent research note. If the company hits any unexpected problems with integrating its mergers and acquisitions (M&A), containing its costs, COVID-19 or a heightened competitive environment, the performance could fall short, he added.

Chart courtesy of www.stockcharts.com

Three Strategic Defense Stocks to Buy Could Outperform Expectations

Upside beyond the price target would be possible with better-than-anticipated upturn in the federal budget, inexpensive and well-integrated M&A activity and unexpected capital returned to shareholders in the form of buybacks or special dividends, BofA continued.

The company reported second-quarter fiscal 2022 results, for the period ended Sept. 30, showing revenue growth of 4.3% and a 3.6% quarterly increase in revenue, excluding billable expenses. Its net income jumped by 13.8% to $154.8 million, while adjusted net income climbed by 18.6% to $170.2 million.

On September 13, 2021, the company announced it had completed its acquisition of Tracepoint, a digital forensics and incident response company, after making an initial strategic investment in December 2020. The transaction aligns with Booz, Allen Hamilton’s broader capital deployment strategy to accelerate advancement in critical technology areas such as cybersecurity.

“Our strong second-quarter performance creates momentum that will allow us to accelerate through the rest of this fiscal year and beyond,” said Horacio Rozanski, president and chief executive officer of Booz, Allen Hamilton. “The team delivered solid revenue growth, excellent bottom-line results and strong progress on hiring that positions us for continued success.”

Income investors will appreciate that the company pays a quarterly dividend of $0.37 per share.

CACI International Snags Spot Among Three Strategic Defense Stocks to Buy

Reston, Virginia-based CACI International Inc. (NYSE: CAIC) is a defense contractor that received a $340 price objective and a buy recommendation from BofA. CACI’s capital deployment strategy, including opportunistic share repurchases, offsets the discount related to its lack of dividend versus its peer group.

CACI’s software-based technology strategy is showing traction, BofA wrote. However, risks include potential cuts to the DoD budget versus anticipated spending, problems finding targets to buy, integrating M&A, hiring the right personnel, containing its costs, estimating costs and executing on fixed price contracts, as well as sustaining reputational risk and future awards.

Potential to outperform stems from better-than-anticipated federal spending for innovative technologies and modernization, inexpensive and well-integrated M&A activity, unexpected capital return to shareholders in the form of dividends, market share gains in the mission technology arena and better-than-expected margin expansion, BofA wrote.

Chart courtesy of www.stockcharts.com

Contract Wins Aid CACI as One of Three Strategic Defense Stocks to Buy

CACI International announced on Nov. 9 that it won a new five-year single-award task order worth potentially $785 million for Special Operations Forces Emerging Threats, Operations, and Planning Support (SOFETOPS). The company will provide expertise in integrated information warfare (IW) and electronic warfare (EW) solutions, training, readiness, and modernization to advance U.S. Army Special Operations Command (USASOC) missions.

John Mengucci, CACI president and CEO, said, “CACI’s mission expertise in operational support, intelligence analysis, technology integration, and training will help Special Operations Forces adapt to the current and future threat environment. Our experts will leverage advanced solutions for our mission partners and deliver training models based on first-hand experiences to prepare trainees with realistic scenarios.”

CACI reported on Oct. 26 that it received a prime position in a technical services support (TSS) contract to serve the U.S. Deputy Chief of Naval Operations. The contract is a six-year, multiple-award, indefinite delivery and indefinite quantity pact.

Terms call for CACI to provide enterprise expertise to ensure sailor readiness and help implement a broad transformation of the MyNavy HR information system. CACI will also support MyNavy HR’s enterprise technology architecture, portfolio management, data management, business process reengineering, government operations, and operational performance to meet evolving needs.

Acquisitions Help Three Strategic Defense Stocks to Buy

On the acquisition front, CACI announced it entered into an agreement on Nov. 3 to acquire Los Gatos, California-based SA Photonics, Inc., a developer and implementer of innovative multi-domain photonics technologies for free space optical (FSO) communications. The $275 million acquisition of SA Photonics will broaden CACI’s capabilities as the leading U.S.-based FSO laser communications provider supporting space, airborne, and terrestrial missions to U.S. government and commercial customers.

SA Photonics’ IP technology offers low size, weight, power and cost (SWAP-C) solutions that transmit data 25 times faster than current radio frequency systems, while using payloads that are half the size. Plus, SA Photonics’ high-volume low-earth-orbit (LEO) optical inter satellite links (OISL) technology complements CACI’s FSO technology optimized for medium-earth-orbit (MEO) and geosynchronous-equatorial-orbit (GEO) orbits. CACI’s photonics-based capabilities enable terrestrial communications at higher-bandwidths and with a lower probability of detection.

CACI expects to close the transaction by the end of 2021, pending customary regulatory reviews.

With expertise in joint and coalition interoperability, as well as advanced technologies for command and control, signals intelligence, cyberspace and space-based communications, CACI also is helping to develop and deploy Joint All-Domain Command and Control (JADC2). Across the Department of Defense, CACI is seeking to usher in JADC2 as a vital component of 21st century national security.

List of Three Strategic Defense Stocks to Buy Adds Leidos Holdings

Leidos Holdings Inc. (NYSE: LDOS), of Reston, Virginia, is a spin-off of Bethesda, Maryland-based Lockheed Martin (NYSE: LMT). The global defense company previously separated out its Information Systems and Global Solutions (IS&GS) segment and folded it into the Leidos security solutions business.

The move, touted as a tax-efficient strategy, led to a one-time cash payment of $1.8 billion to Lockheed Martin to share with its stockholders. Lockheed Martin stockholders acquire 50.5% equity in Leidos, with 77 million shares valued at $3.2 billion.

BofA’s price objective of $125 and buy recommendation of Leidos is based on the prospect that the company should trade in line with the defense prime contractors amid strong U.S. National Security demand for innovative technologies and solutions, along with solid free cash flow that is offset by a sluggish award environment and near-term supply chain pressures. There also is inflationary pricing from competitive dynamics and concerns about labor cost increases.

Risks to BofA’s price target include cuts to the U.S. government budget versus expectations, increased competition from non-traditional rivals, problems integrating M&A, hiring the right personnel, containing costs, executing on fixed price contracts and sustaining future awards.

Upside to the price target feature a better-than-anticipated federal budget allocated to innovative technologies and modernization, inexpensive and well-integrated M&A activity, unexpected capital return to shareholders in the form of dividends or share buybacks, market share gains and improved margin expansion.

Chart courtesy of www.stockcharts.com

Pension Chairman Chooses Favorite Defense Fund for Income Investors to Purchase

“The U.S. defense budget will increase despite the withdrawal from Afghanistan as policy shifts toward containing China and Russia,” said Bob Carlson, who leads the Retirement Watch newsletter. “Defense stocks sell at solid valuation discounts to the S&P 500, despite having higher estimated earnings growth than the S&P 500.”

Retirement Watch chief Bob Carlson talks to Paul Dykewicz.

Carlson, who also serves as chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, said that his favorite defense fund right now is SPDR S&P Aerospace and Defense (XAR). The fund focuses on small- to mid-size companies. Top holdings recently were Heico (4.88% of the fund), Spirit AeroSystems (4.57%), Textron (4.55%), Hexcel (4.43%), and TransDigm (4.40%).

The ETF recently held 32 positions and had 44% of the fund in the 10 largest positions. It is up 4.98% so far this year and 15.78% over 12 months.

Chart courtesy of www.stockcharts.com

COVID-19 Risk Rises as Cases and Deaths Jump in Certain States

The highly transmissible Delta variant of COVID-19 has been joined by the Omicron variant to increase the risk for the United States and other regions of the world. Public health experts and government leaders still are urging increased vaccinations and booster shots, as well as stepped-up mask wearing.

The Centers for Disease Control and Prevention (CDC) has documented that the variants are leading to a rise in the number of people vaccinated from COVID-19. However, roughly 62 million people in the United States remain eligible to be vaccinated but have not seized the opportunity, said Dr. Anthony Fauci, a White House medical adviser.

As of Nov. 30, 233,207,582 people, or 70.2% of the U.S. population, have received at least a single dose of a COVID-19 vaccine, the CDC reported. The fully vaccinated total 197,058,988 people, or 59.4%, of the U.S. population, according to the CDC.

COVID-19 deaths worldwide, as of Nov. 30, topped the 5 million mark, soaring to 5,214,928, according to Johns Hopkins University. Worldwide COVID-19 cases have jumped past 260 million, reaching 262,753,012 on that date.

U.S. COVID-19 cases, as of Nov. 30, soared to 48,554,890 and caused 780,140 deaths. America has the dubious distinction as the country with the most COVID-19 cases and deaths.

The three strategic defense stocks to buy as China and Russia act aggressively could rise more than expected if the leaders of these countries continue their threats in the coming weeks and months.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of  StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many othersCall 202-677-4457 for multiple-book pricing.

The post Three Strategic Defense Stocks to Buy as China and Russia Try to Expand Their Turf appeared first on Stock Investor.

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Dr. Peter McCullough: Official COVID “Narrative Has Crumbled”

Dr. Peter McCullough: Official COVID "Narrative Has Crumbled"

Authored by Art Moore via WND.com,

Dr. Peter McCullough – a renowned cardiologist and highly published medical scientist whose confrontation of the government’s COVID-19 policies.

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Dr. Peter McCullough: Official COVID "Narrative Has Crumbled"

Authored by Art Moore via WND.com,

Dr. Peter McCullough – a renowned cardiologist and highly published medical scientist whose confrontation of the government's COVID-19 policies has drawn more than 40 million views on Joe Rogan's podcast – told WND in a video interview Thursday night the official pandemic narrative that has been fiercely guarded by establishment media and social-media censors is "completely crumbling."

That narrative, he said, included "false statements regarding asymptomatic spread, reliance on lockdown and masks – which obviously didn't work – the suppression of early treatment, the mass promotion of vaccines that failed."

"And now here we are, almost in complete free fall," McCullough said, referring to the record number of COVID-19 cases as officials acknowledge the vaccines don't prevent infection or transmission.

McCullough noted that in California, with the more contagious but much milder omicron variant now dominant, health care workers who tested positive for COVID-19 and had symptoms were told to go back to work.

"With that, I think that's it. I think that's the end. The narrative has crumbled. People don't want these vaccines," McCullough said.

"The vaccines should be pulled off the market. They clearly are not solving the problem."

The focus, he said, should be on "treating high-risk patients who develop symptoms" with some of the early treatments that he and other physicians around the world have found to be effective, including ivermectin and a new drug granted emergency use authorization by the FDA, Paxlovid.

McCullough cited a study from Denmark and data from the U.K.'s health agency showing that the vaccines have zero effectiveness against omicron.

Completing this poll entitles you to WND news updates free of charge. You may opt out at anytime. You also agree to our Privacy Policy and Terms of Use.

"That's not misinformation," he said. "I'm just quoting the data. All of this can be looked up. Fact-checkers can look at it. I know I'll never have any problems with allegations of misinformation, because I just quote the data."

President Biden clearly had McCullough in mind when on Thursday he urged social media companies and media outlets to "please deal with the misinformation and disinformation that's on your shows. It has to stop."

McCullough pointed out his work has been relied upon by courts across the nation, including the U.S. Supreme Court, and he has testified to the U.S. Senate and will be back there later this month.

"I think America knows who is giving them the straight story."

In the half-hour video interview with WND (embedded below), McCullough also discussed:

  • The punishment of physicians who counter the official COVID narrative and use clinically indicated, FDA-approved drugs off-label such as ivermectin to treat COVID-19 patients, including a colleague in Maine whose was ordered to undergo a psychological examination after her license was suspended;

  • His participation in a rally in Washington, D.C., on Jan. 23 protesting vaccine mandates;

  • The Supreme Court's rulings Thursday on vaccine mandates;

  • The possibility that omicron could spell the end of the pandemic, serving as a "universal booster";

  • Data showing that vaccination has backfired, making the pandemic worse in nations with high vaccine intake;

  • The lethality of the mRNA vaccines;

  • His view on Biden's mass testing program;

  • His take on new FDA-approved treatments and his simple, inexpensive, over-the-counter protocol for treating omicron;

  • The unwillingness of so many doctors to "come off the sidelines" and treat patients for COVID-19;

  • The "crisis of competence" among top government health officials;

  • Where to find resources and support for physicians and patients, and for employees confronting mandates.

"I think Americans are going to understand that their individual choice is really what's going to matter in the end," he McCullough told WND in conclusion. "If Americans decide that they're not going to take any boosters or any more vaccines, it doesn't matter how many mandates or how many court decisions that happen. The vaccine program is going to crumble. I think it's just a matter of saying no."

He emphasized that the vaccines are still "research."

"No one can be forced into it," he said of vaccination. "And they're not turning out to be safe or effective. So, if  everybody just stands firm and declines the vaccines, I think that will be the quickest way for us to get out of this."

See the WND interview with Dr. Peter McCullough:

McCullough, in a video interview with WND in December, called for a "pivot" from the current policies to early treatment and "compassionate care" for those who have COVID or have suffered vaccine injuries, which have included myocarditis, neurological issues and blood clotting.

"Now is the time for doctors to step up. Now is not a time for rhetoric or harsh statements regarding scientific discourse," he said.

Many of McCullough's 600 peer-reviewed publications have appeared in top-tier journals such as the New England Journal of Medicine, Journal of the American Medical Association and The Lancet. He testified to the U.S. Senate in November 2020 against what he described as the federal government's politicization of health care during the pandemic, curbing or blocking the availability of cheap, effective treatments. In a speech in September, he told of having been stripped of the editorship of a Swiss-based journal after having lost his position with a major health system, "with no explanation and no due process." Baylor University Medical Center fired him in February. And Texas A&M College of Medicine, Texas Christian University and University of North Texas Health Science Center School of Medicine have cut ties with McCullough, accusing him of spreading misinformation.

"I've been stripped of every title that I've ever had in that institution. I've received a threat letter from the American College of Physicians, [and] a threat letter from the American Board," he said in September.

All because of his "lawful" participation "in a topic of public importance."

He said there are "powerful forces at work, far more powerful than we can possibly think of, that are influencing anybody who is in a position of authority."

McCullough is the chief medical adviser for the Truth for Health Foundation, a physician-founded charity that says it is "dedicated to following the Oath of Hippocrates to serve individual patients to the best of our ability and judgement and to uphold the highest standards of medical ethics."

*  *  *

Last year, America's doctors, nurses and paramedics were celebrated as frontline heroes battling a fearsome new pandemic. Today, under Joe Biden, tens of thousands of these same heroes are denounced as rebels, conspiracy theorists, extremists and potential terrorists. Along with massive numbers of police, firemen, Border Patrol agents, Navy SEALs, pilots, air-traffic controllers, and countless other truly essential Americans, they're all considered so dangerous as to merit termination, their professional and personal lives turned upside down due to their decision not to be injected with the experimental COVID vaccines. Biden’s tyrannical mandate threatens to cripple American society – from law enforcement to airlines to commercial supply chains to hospitals. It's already happening. But the good news is that huge numbers of "yesterday’s heroes" are now fighting back – bravely and boldly. The whole epic showdown is laid out as never before in the sensational October issue of WND's monthly Whistleblower magazine, titled "THE GREAT AMERICAN REBELLION: 'We will not comply!' COVID-19 power grab ignites bold new era of national defiance."

SUPPORT TRUTHFUL JOURNALISM. MAKE A DONATION TO THE NONPROFIT WND NEWS CENTER. THANK YOU!

Tyler Durden Mon, 01/17/2022 - 23:50

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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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Zinc Outlook 2022: Small Refined Zinc Deficit Ahead

Click here to read the previous zinc outlook. Following an uncertain 2020, zinc prices steadily rose throughout 2021 to hit a 14 year high in the second half of the year.The power crisis and an increasing demand for the base metal as the strict lockdown..

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Click here to read the previous zinc outlook.

Following an uncertain 2020, zinc prices steadily rose throughout 2021 to hit a 14 year high in the second half of the year.

The power crisis and an increasing demand for the base metal as the strict lockdown restrictions were lifted supported prices during the 12 month period.

As the new year begins, the Investing News Network (INN) caught up with analysts to find out what’s ahead for zinc supply, demand and prices.


Zinc outlook 2022: 2021 in review


Prices kicked off the year above the US$2,800 per tonne mark after rallying for most of the second half of 2020. The recovery in the steel sector helped the base metal throughout the first half of 2021 as COVID-19 lockdown measures eased, supporting demand for zinc.

Commenting on the main trends seen in the market in 2021, Helen O’Cleary of CRU Group told INN zinc’s demand recovery was stronger than expected in the US and Europe but lagged in Asia excluding China.

In October, zinc prices hit their highest level in 14 years, hovering around the US$3,800 mark on the back of the power crisis and cost associated with carbon emissions.

“Zinc’s price outperformed expectations in 2021 on the back of strong demand and smelter disruption, particularly in Q4 when European smelters started to cut back due to record high energy prices,” O’Cleary said.

One of the world’s top zinc smelters, Nyrstar (EBR:NYR), said in October it was planning to cut production at its European smelter operations. Mining giant Glencore (LSE:GLEN) also said it was adjusting production to reduce exposure to peak power pricing periods during the day.

Speaking with INN about zinc’s performance, Carlos Sanchez of CPM Group said zinc has been in recovery since prices bottomed out in 2020, helped in part by vaccination globally and also by supply disruptions around the world.

“The most recent issue is the concern about high energy input costs into smelters in Europe — that's been pushing prices higher recently,” he said.

Even though prices could not sustain that level until the end of the year, prices remained above US$3,500 on the last trading day of 2021.

Zinc outlook 2022: Supply and demand


As mentioned, demand for base metals saw an upward turn in 2021 as the world economy recovered on the back of stimulus plans and as vaccination rollouts took place in many parts of the world.

Looking at what’s ahead for demand in 2022, CRU is expecting Chinese demand growth to slow to 1.1 percent year-on-year as the effects of stimulus wane.

“In the world ex. China we expect demand to grow by 2.4 percent, with the ongoing auto sector recovery partially offsetting the construction sector slowdown in Europe and the US,” O’Cleary said.

CPM is also expecting demand to remain healthy in 2022, both in China and outside of China, including demand from developing countries.

“One thing that remains uncertain is what will happen with COVID,” Sanchez said.

Moving onto the supply side of the picture, the analyst expects that if everything remains status quo, disruptions are unlikely to happen.

“There are going to be some blips here and there, but there have been some labor issues in Peru, yes, there's been some energy problems in Europe and China, but that's a fact in zinc output and in demand to an extent,” Sanchez said. “But really the catalysts that we don't know, and how it can affect prices is how COVID will impact industries.”

For her part, O’Cleary is expecting most disruptions in Q1, with CRU currently having a disruption allowance of 55,000 tonnes for that period.

“But this may well tip over into Q2,” she said. CRU is expecting mine supply to grow by 5.10 percent year-on-year in 2022 and for the concentrates market to register a 190,000 tonnes surplus.

Meanwhile, smelter output is forecast to grow by less than 1 percent year-on-year in 2022, according to the firm, which is currently forecasting a small refined zinc deficit in 2022.

“Should smelter disruption exceed our 55,000 t allowance the deficit could grow,” O’Cleary said. “But high prices and a tight Chinese market could lead to further releases of refined zinc from the State Reserves Bureau stockpile, which could push the market towards balance or even a small surplus.”

Similarly, CPM Group is also expecting the market to shift into a deficit in 2022.

“That's due to the strong demand, recovering economies of COVID and its financial economic effects,” Sanchez said.

Zinc outlook 2022: What’s ahead


Commenting on how prices might perform next year, O’Cleary said prices are likely to remain high in Q1 due to the threat of further energy-related cutbacks in Europe during the winter heating season.

O’Cleary suggested investors to keep an eye on high prices and inflation, as these factors could hamper zinc demand growth.

Similarly, CPM Group is expecting prices to remain above current levels and to average around US$3,400 for the year.

“I wouldn't be surprised to see zinc top US$4,000,” Sanchez said. “But at the same time, I don't think it holds above there; you'd have to have really strong fundamentals for that to happen, stronger than what's happening now.”

The CPM director suggested zinc investors should keep an eye on COVID developments and be quick movers, taking a position whether it's short or long.

Looking ahead, for FocusEconomics analysts, prices for zinc are seen cooling markedly next year before falling further in 2023, as output gradually improves and new mines come online.

“Moreover, fading logistical disruptions and easing energy prices will exert additional downward pressure, although solid demand for steel will continue to support prices,” they said in their December report, adding that pandemic-related uncertainty clouds the outlook.

Panelists recently polled by the firm see prices averaging US$2,827 per metric tonne in Q4 2022 and US$2,651 per metric tonne in Q4 2023.

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