September 20th, 2022 | 12:53 CEST
Trade war and new world order: BYD, NIO, Almonty Industries, Airbus
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"[...] 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
BYD and NIO: Expansion despite headwinds
The BYD share has been in the headlines recently. The background to this was the sale of shares by star investor Warren Buffet. But in the meantime, the market has concluded that Buffet may simply have taken profits after years of involvement. Now, the focus is shifting back to operational progress. BYD, in particular, has a lot to report. The BYD Seal, a mid-size sedan that can compete with the Tesla Model 3 and is already very popular in China, is scheduled to arrive in Germany in 2023. In China, the car costs around EUR 32,000. The key data: A range of between 550 and 650km, with lots of power and all kinds of technology.
China competitor NIO is also pushing into Germany and will open a showroom in Berlin this fall. At the same time, sales of the sedan with the somewhat unwieldy name ET7 are to start. NIO is unique because, unlike Tesla, they do not want to rely on charging stations but rather remove batteries in a matter of minutes and replace them with new ones. Whether this service will pay off and convince customers remains to be seen. But the battery swap is certainly a unique selling point. The NIO share is in a long-term downward trend. However, the chart could brighten up a bit above EUR 22. The situation is similar for BYD. Here, investors have to endure high volatility; on a three-year view, the uptrend still looks just about ideal.
Almonty Industries: Provides self-sufficiency around tungsten
The fact that shares in e-car manufacturers are not even more optimistically valued could also be due to the tensions emerging behind the scenes. The US is currently upsetting the industry and making subsidies dependent on whether vehicles and batteries were predominantly produced in the US. As a result, battery metals from sources outside China are becoming more relevant again. Market experts, such as Lewis Black, CEO of Almonty Industries, stress that the industry must now work with the metals on the market. "There is no other option at the moment," the Company executive said in an interview with Cheddar News. At the same time, Black makes clear how risky it is to have no other options, "especially when you are dealing with jurisdictions that declare one thing and act completely differently". Black is working with his Company to significantly reduce the world's dependence on tungsten from China.
The Sangdong mine, which Almonty operates in South Korea, recently reported operational success - completing work as planned despite heavy rain. Many people know tungsten from classic light bulbs, but the metal is in demand in the automotive industry, aviation, medical technology, and telecommunications. Recently, tungsten has also been considered a battery metal. Tungsten is suitable to replace the controversial cobalt. In Asia, more tungsten in batteries is expected to improve charging performance and safety. The Almonty Industries share recently lost ground due to general recession fears. Given the size of the Sangdong project, which alone can supply 30% of tungsten outside China and has a clear ESG profile, the stock could be an anticyclical opportunity. Financiers, including Germany's KfW, are holding out for the Company, which plans to go into full production in the coming months.
Airbus: World market leader under pressure
Airbus could also become an indirect customer of Almonty Industries - tungsten also plays an important role in aviation. The market is consistently divided along geopolitical structures: Airbus and Boeing share the "Western world," while China and Russia try to keep up with their own aerospace industries. A trade war flare-up could affect the supply of critical raw materials. Even today, the supply of subcontracted products does not always work out. Airbus' fuel-saving models are particularly in demand. The aerospace company, which is also active in space, is now often the first port of call for customers because of the problems at Boeing. That makes the share interesting even in a challenging market environment. However, the share price has not been getting off the ground for some time. The share is not an alternative.
In times of a smoldering trade war or at least a trend toward regionalization, even global market leaders like Airbus have a hard time. The situation is even more difficult for growth companies from China, such as NIO and BYD, which want to gain a foothold in Europe. Laughing third parties could ultimately be producers of critical raw materials that do not come from China, thus virtually forcing themselves on the Western industry. Almonty Industries is currently on the threshold of full production. The share is currently valued at a low level, and the coming months will be exciting in operational terms. The potential is therefore great. The opportunity to do a deep dive on Almonty Industries is already available on September 27. CEO Black will be presenting at the International Investment Forum (IIF).
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