After losing my pants investing in an S-chip more than 10 years ago, I swore never to touch anymore S-chips in my life again. The impetus for this article arises from a request of a member who enquired about the recent bout of volatility of Jiutian Chemical share price. In the course of my research, I find that this stock could be an interesting COVID-19 recovery play.
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Since 2007, Jiutian Chemical share price had collapsed by a stunning 90% to reach abysmal levels. The arrival of COVID-19 in 2020 had also led to Jiutian Chemical share price plunging to a record low of $0.01. Against this backdrop, investors could be forgiven for thinking that it’s the end of the road for Jiutian Chemical share price.
Nonetheless, sometimes life can be stranger than fiction. Who would expect that Jiutian Chemical share price is now trading at a 5-year high? What could have led to the revival of Jiutian Chemical share price? Is it really going to be light at end of tunnel for Jiutian Chemical share price?
In my humble opinion, the vaccine for COVID-19 could be pivotal in the turnaround of the ailing S-chip. This is because to transport the vaccine to various countries, large amount of dry ice is needed. To manufacture dry ice, carbon dioxide is needed. Currently, there is a global shortage of carbon dioxide.
Although Jiutian Chemical is not a major supplier of carbon dioxide, the company is a major manufacturer of dimethylformamide (DMF). Carbon dioxide is a by-product of industrial processes like DMF production. In fact, Jiutian Chemical also sells industrial and consumable carbon dioxide to suppliers. With the deployment of COVID-19 vaccine, the demand of carbon dioxide sky-rocketed, causing the spot prices of industry commodities like DMF to surge in the latter half of 2020.
According to UOB Kay Hian, the average selling prices for DMF increased from RMB4,512 per tonne in Q2FY2020 to RMB5,927 yuan per tonne in Q3FY2020. As at Nov 3, the spot prices for DMF were around RMB11,950 per tonne. On the back of the surging DMG spot prices, Jiutian Chemical share price rose dramatically as well.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Jiutian Chemical before. Whether Jiutian Chemical share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Jiutian Chemical share price at turning point?
Researching on Jiutian Chemical is challenging because the company had taken down [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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