Shares of graphite electrode makers HEG Ltd. and Graphite India Ltd. have surged 27.8% and and 15.2%, respectively, in the last two sessions.
Both the stocks have seen strong gains on the back of China's Ministry of Commerce's announced an outright ban on the export of several materials to the United States.
China Bans Graphite Exports To US
China's Ministry of Commerce on Tuesday announced that the country will bar the exports of several materials that are critical for chip-making to the United States. This means that China will no longer export gallium, germanium, antimony and super-hard materials to the US.
Citing concerns related to military usage as rationale behind the ban, the notice also states that China will impose a stricter review process for dual use graphite products.
Impact On India
China's ban of graphite exports to the US have led to a positive sentiment around the Indian graphite companies like HEG and Graphite India.
The consumer sentiment lies around how China's restrictions may lead to higher demand for Indian graphite products in the United States. The reduced supply by China may also lead to higher graphite prices globally, which stands positive for sales realisations.
As per HEG's annual report, exports accounted for 67% of its total turnover in fiscal 2024. Furthermore, the US market accounted for 25% of the company's export revenues, and 16.8% of its total fiscal 2024 revenues.
For Graphite India, 35% of the company's fiscal 2024 revenues came from the exports, with the US being one of the key markets contributed to the overseas sales revenue.
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