Nextsource Materials Inc (NSRCF)

[spartex]

Graphite outlook 2019: Better market expected

As the year comes to an end, many market watchers are wondering what’s ahead for graphite.

In 2019, NextSource’s Nykoliation predicts a better market in general.

“It is almost monthly that we are seeing the major car manufacturers updating the market on their research and development efforts and growth plans for electric vehicle models. These efforts will put continued incremental pressure on the -100 material pricing,” he said.

Additionally, there is a growing trend for manufacturers to source their graphite and value-added anode material from non-Chinese sources, as China continues to grapple with environmental issues.

“Jumbo/extra-large flake (+50/95-97 percent mesh) graphite required for expanded graphite applications (graphite foils) is an increasing market and is commanding the highest prices. Expect to see continued price strength for those applications,” Nykoliation added.

For his part, SRG’s Landry-Tolszczuk highlighted that graphite supply remains tight and prices in graphite have been trending upwards in 2018.

“[This] is expected to continue in 2019,” he said, adding that the market seems uncorrelated to fundamentals right now, so it is hard to predict what will happen to equities in 2019.

Next year, Leading Edge’s Way said the market will see accelerated growth in forecast demand for battery materials — the space will see more indicators of electrification of transportation in all regions.

“It will be good for graphite and battery materials, but it will be tough to manage expectations as the true demand will lag the forecasts and it will be a few more years before we see true battery material demand,” he added.

Speaking about the short-term graphite market, Asbury Carbons’ Riddle said he expects growth in the market, although for prices he expects natural flake graphite will be lower or remain flat next year.

For investors interested in the graphite space, Riddle gave his best suggestion for the new year.

“[As an investor] in the natural flake graphite market, it’s about finding the right junior miner that fits the criteria of being low cost, that has a good business plan and that is realistic in the market,” he said.

Similarly, NextSource’s Nykoliation said investors should do their homework.

“Focus on companies that have technical/feasibility studies completed on their projects that show project economics,” he added.

SRG’s Landry-Tolszczuk suggested investors should pick projects that have a competitive advantage and have a path to production.

“Unlike other resource plays, graphite resources don’t get bought out by majors, they have to go to production. If CAPEX is too large or regulatory processes are too long, projects won’t get done and no value will be driven. Pick projects/management teams which you believe will get built in the next few years with a plan to get there,” he added.

For Way, right now there are some buying opportunities. “Share prices are way down and the fundamentals of these strong battery material companies remain unchanged. It is a good time to average down if you are a believer in the update of electrification of transport,” he added.

For Hexagon’s Rosenstreich, those new to the sector should remember that the graphite market is not a mining play — it is not about mining metrics or resources or even grades, but marketing.

“The resources are relevant, but the biggest valuation driver is the company’s ability to penetrate specific markets and have a sound marketing strategy,” he added.


https://investingnews.com/daily/resource-investing/battery-metals-investing/graphite-investing/graphite-forecast/

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Well......NEXT has a 10 year binding agreement with Japanese graphite company that supplies to the largest Japanese battery makers, so they have not only LOW Capex with their design but also high interest from many countries that supply high quality flake graphite (esp growing EV battery market).