Hi Romann, well that was an interesting read, unfortunately I am having difficult reconciling it to WKT research of what it's target markets are and growth in these markets compared to the battery anode market. Whilst I understand the positive posters want everyone to focus on expandables and the supposed massive demand well perhaps we need to look at some actual statements and research presented by WKT in the latest company presentation. I do recommend everyone to actually have a read of it in depth, try not to just read the headlines.
Page 8 though is a must read for anyone wanting to get some more considered research done by their company as opposed to HC hype.
Anyway so firstly where does WKT see it's product being sold. Well they outline it pretty clearly on that page 8
"Linda Jumbo produces a larger flake size graphite which will predominantly sold into the traditional and more specialised non- anode markets."
So sounds like it's largely going into "traditional" markets and more "specialised non adode" market, which does include the much hyped on HC expandable market.
So who would have thought eh, "traditional markets" , I wonder what that includes. Well page 8 again
"Graphite is utilised in traditional industries including refractory and foundry, "
Who would have thought reading from reading on Hotcopper that WKT graphite is targeting the refractory and foundry market.
And also of course the "specialised non adode" market, which is the bit the "positive posters" like to focus on, don't really want to talk about refractory and foundry for some reason.
Ok so "specialised non anode market" includes the Hotcopper hyped "expandable" market. Now when I see the word "specialised" I immediately think of it as being small or needing some level of expertise. Well for those that need reading classes, you better put them back on before venturing back to page 8 to see how small the "specialised" expandable market is and how small it's expected to stay.
Anyway, when you get to page 8 you will see a couple of graphs, looks real exciting, especially that one with all the yellow, looks like demand is going through the roof. But alas, the yellow is the anode demand, WKT reasearch has that going through the roof, they even spell it out for us, again on page 8
"Graphite is also utilised in the anode for batteries which is a larger driver of forecast demand given the developments in the electric vehicle market."
Unfortunately that's not where WKT graphite is predominanently going, remember its foundries, refractory and specialised non adode.
So major disappointment, we may as well ignore all that yellow on that first graph. Pity that.
Means we must need to look at one of those other boxes on top of the yellow, but gee they don't seem to be getting much bigger as the years roll by, do I need a better set of glasses? Where are our "Expandables", must be there somewhere?
Oh well got the better specs out, can now see the next dark grey box, but no it's not expandables , when I look across at the legend it's tell me this is that "Foundries and expandable" category. Anyway lucky WKT are targeting this market, looks like it's a reasonable size box, though doesn't appear to be getting any bigger from year to year, so that's a major red flag, isn't WKT product predominantly targeting this as one of the two target markets?
So now we are down to all those tiny boxes, surely not. Ah yes, there it is, I got the magnifying glass out, it's one of those lighter grey box, tiny little thing, can't really differentiate it on the graph, just too small. Anyway, thankfully WKT must have realised some of us wouldn't be able to see that box so they have given us a expanded view of that tiny little sector on the graph below. Set lets jump down to that box, but as we do let's rember that these now bigger boxes are in fact representing in total those tiny little boxes that sit above the yellow anode demand.
So now we can see our "expandables" , it's the second lot of grey boxes, just above our other market, the stagnating "foundries and refractories"
So we eventually found it, now let's analyse it with just the glasses need now. Looking at it, seems the market is only about 50,000t currently, trap for beginners, the current year is about the 5th bar along, the graph starts in the past at 2015.
Well approx 50,000 t, that doesn't sound like much. But never mind on page 8 they tell us
"The markets for expandable graphite in particular fire retardants are forecast to exceed industrial and GDP growth due to increased fire safety regulations."
That sounds exciting, it's going to exceed industrial growth rates, pity they didnt tell us what they are or how much it's going to exceed it by. Maybe our little grey box is going to start looking like those yellow anode boxes and I can put my glasses away. But alas no, when we look back at our graph those expandable boxes aren't really expanding (pardon the pun) too much, must be that low starting base that does it. Difficult to work it out exactly but looks like it's only about 150kt by 2035, I really will need those new glasses by then.
So all the existing players (the ones that were actually first to market many moons ago) plus all the hopeful new comers from the likes of Australia, Canada and the rest of the big wide world are going to be fighting for that extra 100kt or so of expandable.
Sounds like an absolute train wreck coming in my very humble opinion, just hope WKT can penetrate that other stagnating market they are predominantly targeting , the "Traditional" refractory and foundries.
For those that want to know how big a train wreck may be coming, well you will need to go to page 11 of that same presentation.
On page 11, the first graph looks impressive, seems to be a shortage of supply looming, but alas remember all those yellow boxes on page 8. The demand is for anode not for WKt predominant target markets of "traditional" and "specialised non anode"
And here is the clincher on WKT target markets, still from page 11, growth figures for our non anode market
"Benchmark Minerals forecast this demand to grow at 3% through the period 2019-2025, and 5% through 2025-2030. Lindo Jumbo product will primarily be utilised in non-anode applications "
So 3% growth till 2025 and then 5%
And then look at the next graph on page 11, look at all that extra supply about to hit the market from about 2021, the even more frightening thing is to look at the colour of those boxes, it tells you what flake sizes are about to experience a major increase in supply. Is it the same stuff WKT has. Wonder what's going to happen to the price in reality.
As I say, sounds like an absolute train wreck coming, thinking SYR proportions, but unlike SYR WKT don't have large institutional support to get them through,and will likely have high interest loans from your expected non bank notes issue, just hope WKT can penetrate that other stagnating market they are predominantly targeting , the "Traditional" refractory and foundries. But that's only in my very humble opinion as always.
Who would have thought, refractories and foundries.
Anyway, here is a link to that WKT presentation, hope everyone takes the time to at least read it, how you interprete it is up to you.
https://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvTDYD5g+4zBGZt/xtke92GA==
All the best and all in my very humble opinion as always.
(20min delay)
