Lithium Market Takes Off Due to Demand from Electric Vehicle Segment: Analyst Ben Isaacson Shares His Outlook on the Specialty Chemicals Space with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - July 18, 2014 - The Wall Street Transcript has just published its Agriculture & Specialty Chemicals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Chemicals Companies Pricing Power - Emerging Market Demand - Specialty Chemicals and Fertilizer Pricing Power - Raw Material Costs - Potash, Nitrogen and Phosphate Markets

Companies include: Agrium Inc. (AGU), CF Industries Holdings, Inc. (CF), BHP Billiton Ltd. (BHP), Potash Corp. of Saskatchewan, (POT), Chemical & Mining Co. of Chile (SQM) and many more.

In the following excerpt from the Agriculture & Specialty Chemicals Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Last time we spoke three years ago, you also had some international coverage. Anybody intriguing on the international front?

Mr. Isaacson: Yara (YAR.OL) may be getting a little overvalued, especially given the recent political turbulence in Ukraine, where much of Europe's gas comes from Russia via Ukraine. When we look at Yara, one of the world's largest nitrogen producers, where the majority of nitrogen production is natural gas, we think its gas costs are probably going higher before they go lower. Therefore we don't see much logic behind the recent share price improvement. We're looking to take a little bit of money off the table with Yara.

K+S, which is known as highest-cost potash producer, has done quite well over the last six months or so on the back of the potash price recovery as well as noise regarding the Russian cartel coming back. We think this is overdone, and again, we'd be looking to take money out of K+S before anything else.

The one interesting international name that we look at is SQM (SQM) in Chile. About half of its EBITDA comes from potash and other fertilizer products; one-third comes from iodine and the rest from lithium and industrial chemicals. The iodine market has had a bit of a tough turn over the last six months or so, but we are quite confident we are seeing bottom in that market.

Lithium is really starting to take off, especially following Tesla's (TSLA) Gigafactory announcement several months ago. The question for Tesla is, where they are going to get all of their lithium from. That factory alone could constitute 20% of global lithium demand in the next couple of years. And then with the potash market stabilizing, we think SQM has really been hit hard and should be bottoming now. We'd certainly be looking to add to our position on any weakness there...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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