HEG, Graphite shares surge up to 14%. Here's why

Shares of graphite electrode manufacturers, HEG and Graphite India, surged 14.2% and 7.5% respectively on Wednesday following China’s decision to implement a stricter review process for graphite exports to the U.S. This move raised expectations that the restrictions could increase demand for Indian graphite producers.

HEG’s shares jumped 14.2% to a four-year high of Rs 569.70 on the BSE, while Graphite India rose 7.5% to Rs 613.05.

The decision by China to tighten its export controls on graphite has created optimism that Indian suppliers, like HEG and Graphite India, could see an increase in demand.


China, the world's largest producer of graphite, plays a key role in supplying the material, which is used in military applications and the production of Electric Vehicle (EV) batteries. The recent decision by China to tighten its export controls could limit the availability of graphite to the US, which may in turn boost demand for Indian suppliers.

This move follows the U.S. government's heightened scrutiny of Chinese semiconductor technology and other critical materials, including gallium, germanium, and antimony, all of which have military applications.

Also read | Honasa Consumer shares rally 10% after co-founder Varun Alagh hikes stake in co

Additionally, demand for graphite is expected to rise as it is a key component in the steel industry, which could benefit from increased government spending in the coming months.

With graphite being a crucial component in steel production, the surge in demand is also expected to be fueled by upcoming government spending aimed at the steel industry. As HEG continues to expand its operations, including a recent increase in production capacity to 100,000 tons, it is well-positioned to capitalize on the growing global demand for graphite. Over 70% of HEG's revenue comes from exports, with the U.S. contributing around 17% of its sales.

The introduction of a Rs 9,000 crore production-linked incentive (PLI) scheme by the Indian government for electric battery components further strengthens HEG’s outlook, especially as it explores entering the graphite anode market for lithium-ion batteries.

China’s announcement of stricter export reviews, especially for shipments to the U.S., is expected to significantly impact global graphite supply chains. However, HEG and Graphite India may benefit as they continue to expand and enhance their global presence, competing with international giants such as GrafTech International and Japan’s Resonac.

Also read | Expect double-digit returns in 2-3 years, Nifty target for Dec 2025 at 26,100: Axis Securities

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)