29. July 2021 | 11:08 CET
JinkoSolar, Carnavale Resources, BASF - Beware of shortages!
The change from fossil fuels to renewable energy sources due to climate change means that raw materials such as copper, lithium and nickel are increasingly in demand. The increasing demand due to new economic sectors such as wind power, electromobility or photovoltaics is offset by an extremely scarce supply. The result is sharply rising prices and an expected shortage in the coming years. In addition, the trade conflict with China is visibly worsening the shortage. The primary beneficiaries of this dilemma are commodity producers who can at least partially cover the supply deficit outside the Middle Kingdom.
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ISIN: JINKOSOLAR ADR/4 DL-00002 | US47759T1007 , CARNAVALE RESOURCES LTD | AU000000CAV5 , BASF SE NA O.N. | DE000BASF111
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Carnavale Resources - Strategically positioned
Fears of rising inflation and shortages of metals such as copper and nickel are currently two of the most discussed topics in the markets. Due to the broad diversification, solutions to the discussed problems can be found in the portfolio of the junior explorer Carnavale Resources. The Australians are focused on acquiring and exploring high-quality early-stage exploration and development projects with prospects in gold, nickel, platinum, copper and strategic minerals related to the electric battery sector, including other new technologies.
In total, Carnavale Resources has 4 option agreements on projects in Western Australia. The advantage of options is that little capital investment is required. It allows the experienced management to explore the properties with a time limit and only take the option to buy if the results are promising.
You can read the full interview with Carnavale Resources CEO Humphrey Hale here.
At the most advanced project, the Kookynie Gold Project, the agreement to acquire 80% interest in the deposit has now been drawn. A cash consideration of AUD 250,000, approximately EUR 155,000, was paid to Western Resources on exercise, and 50 million shares were also issued. Following the development of new high-grade gold zones at the Kooknyie Gold Project, the Australians plan to further explore the property with Reverse Circulation drilling to unlock the high-grade gold potential at depth.
Promising results already came to light in the middle of the month. The third round of drilling included 135 holes totaling 7,432m and was aimed at exploring the potential of the Champion South deposit and following up on the strong gold anomalies identified in the first two rounds of aircore drilling. Here, a high-grade mineralized zone was discovered over 550m at McTavish East, with peak grades of up to 32.5g/t gold from 18m and remains open to the north. Drilling also increased the size of the mineralized zones.
In addition to the second gold project, Ora Banda, where the first soil samples were taken to test for gold anomalies, Carnavale Resources also has two prospective projects. Namely, the Grey Dam nickel project and Barracuda, which hosts nickel, copper and platinum group metals, to help supply the electric vehicle industry in the future. The Australian exploration company is strategically well-positioned with all four projects in the early stages. Significant increases in value are possible here, but this is also where the greatest risk of default lies. For speculative investors, the current level offers attractive entry opportunities. The stock market value of the share, which is also traded in Frankfurt, is only EUR 10.42 million. However, do not forget to set limits when buying.
BASF - Forecasts confirmed
About 14 days ago already, the chemical Company BASF increased its forecasts. These were now confirmed in the figures for the second quarter. The Ludwigshafen-based Company benefited from significantly higher earnings in its upstream basic chemicals businesses. The Materials segment alone grew by 91% compared with the same period last year, while the Chemicals division grew by 75%. Overall, adjusted EBIT increased tenfold to EUR 2.35 billion, while sales rose 56% to EUR 19.8 billion.
Earnings per share were EUR 2.03, well above the analysts' consensus estimate of EUR 1.78. The Chemicals segment is now expected to achieve full-year sales of EUR 2.35 billion. For the full year, sales are now expected to climb to between EUR 74 billion and EUR 77 billion, while adjusted EBIT should be in a range between EUR 7.0 billion and EUR 7.5 billion, according to the latest estimate. Despite the positive figures, BASF lost around 1% in value in the course of trading. According to stock market participants, the figures, which had already been raised recently, were already included in the prices.
JinkoSolar - China pushes
A win in court and patent dispute with photovoltaic Company Hanwha Q Cells averted, but fear of further regulation by the Chinese government weighs on the share price of JinkoSolar. Even though the Company should be one of the winners in the photovoltaic segment in the long term, it is on red alert in the short term. After a daily loss of more than 15%, the share price touched the critical support level at USD 45 but was able to defend it for the time being. A break would lead to further price losses in the direction of the USD 40 mark. Due to uncertainties about further rule changes from the Chinese authorities, one should refrain from an engagement at the moment.
Inflation and the scarcity of raw materials needed for the energy transition are two of the most important issues shaping the picture on global markets. Carnavale Resources is well-positioned for the future with its portfolio. BASF and JinkoSolar are also well-positioned for the future. At JinkoSolar, however, there is currently uncertainty about further regulation by the Chinese regulatory authorities.