Magontec’s stock seems to have caught the ASX’s magnesium wave.
The post Magontec (ASX:MGL) share price leaps another 13%, up 68% in 2 days appeared first on The Motley Fool Australia. –
The Magontec Ltd (ASX: MGL) share price is soaring again today, bringing its gains for the last 2 days alone to a whopping 68%.
Interestingly, the company hasn’t released any price-sensitive news to the ASX since late August. Still, the market seems to be enthused by the producer of magnesium alloy ingots and magnesium and titanium anodes.
At the time of writing, the Magontec share price is 54 cents, 12.5% higher than its previous close.
Though, that’s lower than it was earlier today. The Magontec share price reached 65 cents in intraday trade today, representing a 35% single-day gain.
And it’s not alone. Many ASX magnesium-focused stocks have seen their value surge over the last few days.
Let’s look at what might be driving the company’s stock higher.
Magontec share price surges higher
The Magontec share price is taking off this week amid a potential global shortage of magnesium.
According to a group of European industry associates, the continent expects to run out of magnesium next month.
According to reporting by ABC News, an electricity shortage in China has seen the country’s magnesium production slow. China’s exports of the material could potentially be cut by 10% this year as a result.
While the demand has seen magnesium producers’ stock take off this week, Magontec differs from other ASX magnesium companies.
Magontec doesn’t produce magnesium. However, it does recycle it. The company has recycling facilities in Germany and Romania and uses recycled magnesium to produce alloy ingots.
Therefore, market watchers might assume the company could continue producing alloy ingots despite a shortage of new magnesium.
Additionally, the company supplies the automotive industry, which is expected to be hit hard by the shortage.
Finally, Magontec’s Chinese Qinghai facility receives 75% of its energy needs from hydroelectricity and nearly 10% from solar power. The facility produces magnesium alloy product and, when it can be supplied with magnesium, it might have a greater chance than other producers to run during a power shortage.
However, as the company noted in its annual report, the facility operated at low volumes through financial year 2021.
The post Magontec (ASX:MGL) share price leaps another 13%, up 68% in 2 days appeared first on The Motley Fool Australia.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.