- 04 Dec 2024
- ICICI Securities
CHINA TO ENFORCE STRICTER RESTRICTIONS ON END-USE SALE OF GRAPHITE PRODUCTS TO US
News: As per media sources, China has announced that it will implement stricter end-user and end-use reviews for graphite exports to the US.
Views: This move is response to geopolitical tensions between China and US with new US elect president vehemently articulating imposing tariffs on Chinese good entering US territory. If this move were to be implemented, it is expected to limit the availability of graphite in US, creating favourable opportunity for domestic graphite electrode manufacturers like HEG and Graphite. HEG, in particular, stands to benefit as exports account for over ~70% of its revenue, with the US being a key market within this segment (contributes ~17% of sales). Additionally, the government has proposed a ₹9,000 crores PLI scheme for electric battery components, marks a promising development for HEG given its intent to venture into the production of graphite anode, which is a crucial component for lithium-ion batteries. The stock has already reacted to such developments in yesterday’s market and we see limited potential upside from these levels.
Impact: Neutral