A raging trade dispute between the U.S and China has presented an opportunity, on which Avalon Advanced Materials Inc (OTCMKTS: AVLNF) is riding higher. China boasts of a stranglehold for rare earth metals that it is planning to use to throttle the U.S amidst the escalating tensions.
Avalon Advanced Materials Price Analysis
With Beijing warning it could halt shipments of rare earth metals to U.S companies, Avalon could be in for booming business as it continues to advance its critical materials projects. The Company has made a name for itself in the exploration and development of mineral properties in Canada.
Increased focus on rare metals, used in making permanent magnets used in electric cars and guided missiles, among others, explains why Avalon Advanced Materials is the center of attention amidst the ongoing standoff.
Since trade talks between the U.S and China imploded, and Beijing hinted it would retaliate in the best way it knows, Avalon stock has taken a flight. An 800% plus spike since the start of May attests to growing investors’ confidence about the Company’s long term prospects in view of the rare earth metals standoff between the U.S and China.
The stock is currently trading in a steep uptrend, pullbacks having emerged as buy opportunities from where buyers have come in and continued to push the stock higher. A spike to the $0.10 level has opened the door for the stock to make a run for 52-week highs given the strength of the upward momentum.
The $0.12 is the immediate resistance level that Avalon stock will have to breach to affirm the emerging uptrend. Above the critical resistance level, the stock would have erased all the losses accrued over the past year, setting the stage for it to register a new 52-week high.
On the downside, immediate support is seen at the $0.07 level. Above the support level, the stock remains bullish and likely to continue powering high. A violation of the support level could trigger increased sell-off that could result in Avalon plunging even further back to 52-week lows.
U.S-China Trade War Opportunity
The catalyst fuelling Avalon Advanced Materials market activity has to be the trade standoff between China and the U.S. China plays hosts to a huge chunk of the global rare earth metals, used in every segment of the consumer electronics to the national defense.
The fact that China accounts for roughly 80% of the global rare earth deposits explains why a standoff is the last thing that U.S consumer, electronic companies need at this moment. Amidst the ongoing standoff, electronics companies may have to look elsewhere if they are to maintain a constant supply of rare earth metals needed to produce various electronic devices.
Avalon Advanced Materials is one of the Companies that could help replenish some of the rare earth metal needs should demand to arise. The Company’s rare earth metal mining portfolio is made up of the likes of lithium, tantalum niobium cesium indium gallium, and germanium, among others.
Rare Earth Metal Projects Development
The Company has already made significant progress in the development of three advanced critical materials projects in Canada. The Company is closing in on small-scale production on each of the Nechelacho Rare Earth Elements Project and Separation Rapids lithium Project.
“Demand for rare earth elements, lithium minerals, tin, and other critical materials are all growing at rates exceeding the rate of growth in new supply, creating opportunities for new producers to emerge and fill looming supply deficits. The ability to bring these new supplies to emerging markets quickly is key to taking advantage of the opportunities, “Avalon Advanced Materials in a statement.
Supply shortages for rare earth metals amidst the ongoing trade standoff between the U.S and China presents a unique opportunity for Avalon Advanced Materials. Advancement in the development of electronic devices, mostly focusing on the use of rare earth materials means the Company will always continue to elicit demand given the advancement it has made on its rare earth metals projects.
The stock bottoming out from all-time lows underscores the opportunity at stake as demand for rare earth metals continues to outshine supply. Avalon Advanced Materials is likely to continue climbing the ladder as investors take note of the tremendous opportunity at stake.
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Disclosure: We have no position in AVLNF and have not been compensated for this article.