How to Benefit from Coal/Power Crisis?
A thread ⬇️ wealthsutra.wordpress.com
A thread ⬇️ wealthsutra.wordpress.com
During crisis there are strong chances of encashing a good opportunity. Sometimes it may come at the expense of competitors not doing good due to the crisis. Coal shortage is no exception ! So let us understand who will win in this chaos !
First let us understand why the #coalshortage happened in China ?
Impact
Let us understand it from opportunistic point of view like an Alligator looking for big prey ! The prey here lies in a power intensive industry - Ferro Alloy ! Typically the power required to make the products are very high:
Let us understand it from opportunistic point of view like an Alligator looking for big prey ! The prey here lies in a power intensive industry - Ferro Alloy ! Typically the power required to make the products are very high:
So when power cost soared very high in China then these manufacturers have to shut shops due to power unavailability and unviability both !
The drastic impact can be seen in September !
Chinese Output drop month on Month From {August to September}
•Overall: -24%
•Ferro chrome : -24%
•Silico manganese: - 29%
•Ferro manganese : -20%
•Ferro silicon: - 17%
Chinese Output drop month on Month From {August to September}
•Overall: -24%
•Ferro chrome : -24%
•Silico manganese: - 29%
•Ferro manganese : -20%
•Ferro silicon: - 17%
Tremors across the Globe
Maithan Alloy: A Mispriced Bet
The reason for such a great margin profile lies in the power cost:
4 Reasons to buy
Conclusion
Maithan alloy lies in the sweat spot also due to it being the largest listed player in this segment.
It is a trading bet on this #coalshortage nevertheless it uses coal/coke as a key input so is exposed to coal prices,hence Rising coal prices can be the joker in the pack, so investor should be wary !
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