Two months after Tesla Inc. unveiled plans to drop the usage of rare earths in its future models, ferrite stocks in South Korea are skyrocketing on bets that the material will be an alternative.
(Bloomberg) — Two months after Tesla Inc. unveiled plans to drop the usage of rare earths in its future models, ferrite stocks in South Korea are skyrocketing on bets that the material will be an alternative.
Samwha Electronics Co., which manufactures magnetic materials such as ferrite core and ferrite absorbers, surged by the daily limit of 30% on Tuesday, taking its gains over seven sessions to nearly 270%. EG Corp., a Korean iron oxide manufacturer which supplies to ferrite core makers across Asia, also jumped by the daily limit. CQV Co. and Union Materials Corp. also soared.
The surge comes amid growing speculation that ferrite is the most likely candidate to replace rare earths in Tesla’s electric vehicles, following a surprise announcement by the EV maker early March. The sector got an added boost as South Korean President Yoon Suk Yeol met with Elon Musk in the US late last month, where the two discussed potential business cooperation.
Read: Tesla Comments Spur Plunge in China Rare-Earth Miner Shares
“Stock prices are rising on expectations that Tesla is reviewing using ferrite instead of Chinese rare earths,” said Yoon Joonwon, a fund manager at DS Asset Management Co. “But the replacement is impossible in the short run and we don’t know if those companies will become a supplier of Tesla,” he added.
Read: Tesla’s Vision of EVs Without Rare Earths Will Spur Magnet Race
A March note by research firm Adamas Intelligence said “it’s a proven concept” that ferrite may replace rare earths for Tesla. Analysts say China’s reported move to ban exports of some rare-earth magnet technology — which was translated in Korean media only recently — is also contributing to the rally.
Samwha Electronics is the second biggest gainer so far this year on the benchmark Kospi Index, which has risen 13%. Local funds piled into the stock during April 21-28 with net purchases of $1.2 million, according to exchange data.
Other Samwha group names also spiked on Tuesday with Samwha Electric Co. and Samwha Capacitor Co. up 30% and 11%, respectively.
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