Mat-Chem Notes
WTR-CMI last week. In an up-week for the market, our WTR-CMI index of 30 chemical and material technology companies appreciated 4.8%, surpassing both the S&P 500 and Russell 2000 returns of 2.3% and 3.7%, respectively. FUL’s 13.2% appreciation led our index, as the company delivered strong margins in 2QFY23 (May-23) and provided solid EBITDA guidance for the year. The stock was also helped by FUL’s announcement of two bolt-on acquisitions, Adhezion Biomedical, a privately held medical adhesives company, and XCHEM International, a UAE specialty adhesives manufacturer with a strong position in MENA. Despite lowering its outlook for the June quarter, ASH’s stock also posted a gain for the week. It’s not just production, it’s also data. As geopolitical tensions across the globe rise and animosity between the West and China growing, the move to decouple the automotive (and other) supply chain from China is now expanding to include data transfer between regions in an increasingly data-driven industry, such as EVs. VW’s recent inquiry regarding China’s intentions when it comes to cross-border data transfers is an indication that western companies are beginning to realize that access to data and control of proprietary data are just as important as where their vehicles are built and their components come from. Argentina steps up in lithium battery production. The country’s first lithium battery plant, being commissioned by Y-TEC, a unit of Argentine state oil firm YPF, will begin production in September 2023, with LTHM supplying the lithium carbonate for the production of the cathode, as the country takes a different path from its neighbor Chile when it comes to lithium strategy, focusing on downstream industry development rather than a government takeover of mineral production. Northern Graphite’s plans move forward. The company (OTC: NGPHF) announced an LOI to purchase land in Canada for its anode materials (graphite) plant, while also providing clarification on Namibia’s graphite export ban’s impact on its operations in that country. Another metals junior gets an OEM boost. Element 25 (OTC: ELMTF) announced a supply agreement with GM, whereby the company will supply the auto OEM with manganese sulfate for EV batteries to be processed in the US from material delivered from E25’s Australian mine. The agreement also includes an $85 million loan from GM to build the processing plant in Louisiana, as OEM supply agreements continue to extend beyond lithium and into nickel, cobalt, graphite, and even copper, and now, manganese, other junior and emerging miners, like TMC, should benefit...
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