Summary
- During the graphite boom in 2012, investors experienced a huge run-up in graphite stocks, only to be let down as their performance drastically outpaced their fundamentals.
- There is now an opportunity for contrarian investors to re-evaluate the sector given recent events: the stabilization of prices; projects starting-up or near production; and off-take agreements being signed.
- Blue-sky potential remains enormous from the incremental demand that will be created by ‘technology grade graphite’ to be used in emerging green initiatives and clean technology.
- Supply and demand trends are extremely encouraging, spurred largely by resource nationalism, industry consolidation, and Tesla's gigafactory which alone is supposed to at least double worldwide graphite demand by 2020.
- The NIA graphite explorers index is up ~70% YTD, posting most of those gains quietly this summer, and primarily by advanced projects which are still a ways off their all-time.
Whether you realize it or not, graphite is all around you. Right now it's mostly consumed for refractories, batteries, steelmaking, expanded graphite, brake linings, foundry facings and lubricants. But things are changing and incremental demand is forecast to increase substantially due to emerging green initiatives and clean technologies. Graphite is quickly becoming a necessary material in a plethora of high-tech applications, and graphene (which comes from the base material of graphite) has the potential to "change the world."
Many investors are still trying to understand graphite and its market, which is what I'm setting out to help accomplish in this article. I'll explain what graphite is, different types and deposit geology, current and future uses, supply and demand trends, pricing, a brief market comparison, and most importantly, my six key criteria for what you need to know to be an informed investor in the graphite sector. I'll also briefly discuss the graphite companies that I currently own and why, as well as conclude demonstrating some impressive performance metrics in the sector as of late.
Source:
https://seekingalpha.com/article/2504085-why-the-graphite-sector-is-heating-up-how-to-evaluate-opportunities-and-what-i-own?uprof=44&dr=1
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