It certainly has been a great day to have ASX graphite shares in your portfolio.
This side of the market is absolutely booming today despite the broad weakness which is dragging the ASX 200 index 0.9% lower at the time of writing.
Here's the state of play in the industry currently:
- The Novonix Ltd (ASX: NVX) share price is up 11.5% to 73 cents.
- The Renascor Resources Ltd (ASX: RNU) share price is up 18% to 13 cents.
- The Syrah Resources Ltd (ASX: SYR) share price is up 25% to 66.5 cents.
- The Talga Group Ltd (ASX: TLG) share price is up 12% to $1.11.
What's going on with ASX graphite shares?
Investors have been scrambling to buy these shares today after China announced plans to restrict graphite exports.
Given that China is the world's top graphite producer and exporter, and also refines more than 90% of the world's graphite for use in virtually all electric vehicle battery anodes, this could have a major impact on the market.
According to Reuters, China made the move in a bid to control critical mineral supply in response to challenges over its global manufacturing dominance. China's commerce ministry revealed that the move was "conducive to ensuring the security and stability of the global supply chain and industrial chain, and conducive to better safeguarding national security and interests."
Chief commercial officer at Alkemy Capital Investments, Kien Huynh, told the media outlet:
This bold and unexpected move by China in graphite has taken us by surprise, arriving far sooner than anyone could have predicted.
It certainly will have taken short sellers targeting Syrah Resources by surprise today. As we revealed here earlier, the ASX graphite share is one of the most shorted shares on the Australian share market with a short interest of 10.8%.
If this boosts graphite prices outside China, it could be very good news for the company. That's because prices and demand have been so low this year that Syrah has been shutting down its operations periodically to conserve cash. This may not be necessary in the near future.
Comments from Kang Dong-jin, an analyst at Hyundai Motor Securities, certainly sound positive for Syrah and its locally listed peers. He said:
With this new graphite export curb, South Korean firms which heavily rely on China for graphite imports would need to seek alternatives, such as mines from the United States or Australia, but it would likely increase the cost burden for many.
