Why Last Year’s Best Performing Stock Is Down Over 10% Today

Graphite electrode maker HEG Ltd., the best performing stock last year, fell over 10 percent today on concerns that its stellar run may be over with China increasing capacity after winter production shutdowns.

Larger companies in China with proper measures in place plan to increase graphite electrode production capacity, Nomura said in a report. Graphite electrode supply is expected to improve starting 2019 as companies are working to expand the production of key input needle coke, it said.

Shares of HEG returned the highest 1,350 percent gains in the year-ended March. That came after China shut down polluting steelmaking capacity. Graphite electrodes, used to melt scrap in electric arc furnaces, is made from highly polluting needle coke.

HEG, however, said increasing capacity in China won't impact it. “We have never been competing with China because both manufacture different products,” HEG Chairman and Managing Director Ravi Jhunjhunwala told BloombergQuint in an interview. “For the next two quarters, our realisations will be higher than last quarter.”