100%? 150% 200% ???Exactly what Trump tariff number coming is anyone's guess...Marco Rubio, soon to be confirmed as US new Secretary of State, in his recent bill, called for an initial 150% and increasing that number every year after that...
I see two very important near term catalysts, and one belated Christmas present hopefully hiding under the tree...
1) Trump announces a massive tariff, 100% or higher on all battery material minerals coming out of China, specifically and most importantly, Graphite.
2) China retaliates. Oh please. China elevates from the 'threat' of restricting Graphite to ACTUALLY restricting or banning it to the West. I love China.
3) the belated Xmas present to all NGC shareholders...catalysts 1 and 2 cause a massive and immediate shift in North American OEM strategy and behaviour...and the price of graphite as a result, potentially explodes as a result! Okay, okay...yes, it's on my wish list but we can all dream.
Why would OEMs change their behaviour? Why would the price of graphite potentially explode?
Simply because IMHO it would no longer be tenable, financially tenable, for OEMs to continue to source graphite from China given what 1 and 2 catalysts would to in terms pricing.
Lets say for arguments sake, refined graphite coming out of China is selling for approx $5,000/US tonne...out of the ground, shaped, purified and coated...all in...simple math says it would now cost that same US OEM $10,000/US tonne...that would be devastating to anyone's margins that price shock.
Now imagine, if and potentially when China retaliates to Trumps tariff and bans or restricts graphite....think Antimony...imagine how much higher that $5000/tonne global price would go...and now add 100% to that price!!!
FINANCIALLY UNTENABLE for North American OEMs...which would I think, lead to a change of sourcing behaviour from China to locally here in North America etc....
Remember...China banned antimony. China only controls approx 40% of global supply...antimony shot up approx 240% after the ban...China controls approx 90-95% of global refined graphite...what do you think the price of that commodity would do if China also banned it?
I remember the CEO of LGChem I think it was, made a statement after Biden issued a reprieve about a year plus ago, to the OEM/battery manufactures, re the IRA $7500 rebate...Biden extended by two years the time for OEM's to get off Chinese battery materials and switch to local supply chains...while during that time still be able to qualify for that rebate....
LG ceo was quoted as saying something to the tune of 'We have just averted a disaster.' He believed that single rebate, margin wise, was so essential to their bussiness that he described is a potential crisis. I remember thinking how significant and telling that was at the time.
Fast forward to today...currently North American OEM's enjoy the full $7500 and ZERO graphite tariffs! Today, they enjoy the benefits of having the best of BOTH WORLDS.
Fast forward another almost two months...in comes Trump. $7500 rebate GONE...in addition to soon to be announced Chinese tariffs on battery materials.
Two financial positives are replaced with two financial NEGATIVES within a very short period of time. I would suggest from an OEM's view, that about sounds like something of a disaster.
There is only currently one producing graphite miner in North America with the potential to ramp up production to help address that potential disaster. What do you think the value of that one producer would do if all the above played out?
Not investment advise...just trying to connect a few dots.
Until we get that Chinese tariff number, it's all speculation...but if we get that number, I think it's game on!