March 25th, 2022 | 11:06 CET
SGL Carbon, Almonty Industries, HeidelbergCement - Prices are going through the roof
Supply chain disruptions and shortages of certain raw materials were already occurring well before Russia's invasion of Ukraine. Last year, for example, the shortage of semiconductors in the automotive industry already led to short-time working and production plant closures. Current geopolitical tensions are exacerbating inflationary developments. For the first time, the central banks are attempting to counteract this. However, a further escalation of the price spiral is anything but unlikely. The profiteers here are the commodity producers.
time to read: 3 minutes
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Author:
Stefan Feulner
ISIN:
SGL CARBON SE O.N. | DE0007235301 , ALMONTY INDUSTRIES INC. | CA0203981034 , HEIDELBERGCEMENT AG O.N. | DE0006047004
Table of contents:
"[...] 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
Author
Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
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Commodity producers as profiteers
"The world is facing high inflation, slower economic growth and a shortage of commodities. And if the Federal Reserve fails to get a handle on things, it could take years to solve the problem," said Lewis Black, CEO of Almonty Industries, during an interview with Kitco News. The executive knows a thing or two about supply chains and scarce raw materials. Almonty Industries is all about tungsten. Due to its outstanding properties, tungsten can be found in many applications, such as welding technology, lighting technology, cutting and machining technology of metals, and defense technology. Today, tungsten is indispensable for the modern high-tech industry.
Strategically important producer
Due to the current geopolitical tensions and the further intensifying trade war between China and Russia on the one hand and the Western countries on the other, Almonty plays a key strategic role in the procurement of tungsten. That is because, to date, around 85% of global tungsten production comes from the Middle Kingdom. That gives China a quasi-monopoly and a hand on pricing. For three years now, the price of tungsten APT (ammonium paratungstate) has exceeded the USD 300 per metric ton unit mark for the first time. With the world's largest tungsten mine currently under construction - the Sangdong mine in South Korea - supply chains for tungsten concentrates are expected to ease from the end of the current year. Around 50% of the world's tungsten supply outside China will then be produced by Almonty's wholly-owned subsidiary, Woulfe Mining.
In addition to tungsten mining, the deposit offers additional potential from a larger molybdenum deposit that will be explored in more detail this year. In addition, Almonty Industries has great potential with two further projects in Spain and Portugal. The price of the Almonty share was able to develop strongly on Tradegate in recent weeks and is close to breaking the prominent horizontal resistance at EUR 0.70. Should this be broken, the all-time highs at EUR 0.90 should only be a matter of time. Based on the fundamental conditions, Almonty Industries is, in any case, a promising company.
First gains in a long time
The SGL Carbon share lost just under 7% to EUR 5.47 after the figures for the full year 2021, even though last year was the first with profits of EUR 75.4 million in 3 years. Investors and analysts took a negative view of the outlook for the uncertain fiscal year 2022. Management sees disrupted supply chains and production interruptions at its customers as a possible burden and increased energy and raw material costs. Group sales in 2022 are expected to be at the previous year's level. Ebitda is targeted at EUR 110 million to EUR 130 million, putting the Wiesbaden-based Company behind the current results for 2021.
After the share price bounced off EUR 6.00, the year's lows at EUR 4.65 could be targeted again. Overall, the outlook appears shaky, so the share should be on the watch list at most.
Weak after figures
HeidelbergCement, the building materials group, also suffered strong sales after publishing its financial figures for the full year 2021. The Company reported a profit of EUR 1.76 billion, following a loss of more than EUR 2.0 billion in 2020.
The Heidelberg-based Company intends to pay a dividend of EUR 2.40 for the 2021 financial year. That is EUR 0.20 more than in the previous year. However, analysts had expected more. The Company had already presented preliminary full-year figures in February and provided an initial outlook for the current year.
HeidelbergCement's chart picture has also clouded over, and the path could likewise head in the direction of the low for the year at EUR 47.01.
Inflation continues to rise, and the Ukraine conflict is exacerbating this. Raw materials are becoming scarcer, prices, as in the case of the raw material tungsten, are rushing from high to high. Almonty Industries is responsible for supplying the Western world with tungsten outside China and is interesting in the long term. In contrast, investors should merely observe SGL Carbon and HeidelbergCement.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
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