Daily Brief Energy/Materials: European Lithium , Rio Tinto Ltd, Crude Oil, Valero Energy, Flexible Solutions Internation, Shin Etsu Chemical, Hunan Yuneng New Energy Battery Material, Ionic Rare Earths and more

• Back on the 19th May 2026, European Lithium (EUR AU) entered into a reverse Scheme via a scrip deal with ~34.4% held Critical Metals (CRML US). 
• CRML intended to issue 0.035 new CRML shares for each EUR share. Prior to today’s amended Scheme announcement, CRML’s share price had fallen ~57% from the 28th April 2026 NBIO.  
• The amendment involves a floating share Scheme transaction ratio, subject to a cap and collar, replacing the previous fixed ratio.

• Critical Metals (CRML US) has replaced its previous European Lithium (EUR AU) exchange ratio with a cap-and-floor ratio to partially offset a 48% decline in CRML shares since 28 April.
• Based on CRML’s current 20-day VWAP, the maximum exchange ratio of 0.045x applies, implying a revised consideration 28.6% higher than the previous offer.
• If the CRML 20-day VWAP increases above US$12.00, EUR shareholders will be worse off with the revised offer. However, the likelihood of CRML’s shares almost doubling is remote.

• Context: The BHP (BHP AU) vs. Rio Tinto (RIO AU) price ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
• Highlight: Going long Rio Tinto (RIO AU) and short BHP (BHP AU) targets a 4% return.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• Crude futures opened the week firmer as the standoff between the US and Iran continued without resolution, leaving just a handful of tankers passing through the critical chokepoint.
• Oct26 ICE  Brent futures were 2.4% higher at $90.66/b (2030 BST), while Sep26 NYMEX  WTI was at $84.40/b , also up 2.4% versus Friday’s settle.
• Tensions continued to simmer after the US threatened Iran with an “indefinite” blockade and further financial sanctions , a move which potentially extends the conflict and adds to supply worries.

• As we expected, there continues to be absolutely no sign that the current U.S.-Iran stalemate will end anytime soon.           
• In terms of our energy equity universe, it appears that portfolio managers are now embracing oil price “duration” versus price level, consistent with our “indefinite stalemate” scenario.                         
• We would not “chase” our stocks here, however, and we are looking for opportunities to begin trimming equity length in our model portfolio versus hedging with the commodity.                  

• Q2 Results Not As Bad As Headline Numbers Indicate.
• The headline Revenue number of $7.61 million for Q2 was a sharp decline from the year ago period, which included a one-time $2.5 million food-related R&D fee, however the details of the quarter paint a mixed picture.
• Food revenue was not as strong as expected, as production issues impacted output. 

• The best ROIC in the wafer group (14.5%) does not trade at the best multiple — the PVC business imposes a conglomerate discount; the silicon recovery removes the justification.
• FY2025’s 14.4% profit fall was two independent cycle troughs — Asian PVC and wafer destocking — arriving simultaneously; Q1 FY2026 confirmed both are passing, management calls supply constrained.
• Initiating BULLISH, fair value ¥7,300 (11.5x FY2027E EBITDA); 14.4% capital upside plus 2.0% yield; 23 October H1 result is the catalyst to quantify the Electronics Materials recovery.

• Hunan Yuneng New Energy Battery Material Co., Ltd. is a globally leading new energy materials company focused on R&D, manufacturing, and sales of phosphate-based cathode materials, primarily LFP cathode materials.
• The company ranked #1 globally in phosphate-based cathode materials shipment volume for six consecutive years (2020-2025), holding a 28.2% global market share in 2025.
• Revenue was RMB41,357,671 in 2023, with total assets of RMB49,271,086 and total equity of RMB19,103,243 as of March 31, 2026.

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• Crude futures extended the firm start to the week on Tuesday as fading prospects for peace talks kept markets on edge after Monday’s expiry of the US-Iran MoU.
• Oct26 ICE Brent futures were 0.1% higher at $90.95/b (2030 BST), while Sep26 NYMEX  WTI was at $84.06/b , up 0.4% versus Monday’s settle, though both benchmarks had traded higher earlier in the day.
• On Monday, an unnamed senior Iranian official told Reuters that Tehran will shift to a “fully offensive” military position after stalled efforts to negotiate a permanent end to the war, with Washington ruling out extending a temporary ceasefire agreement.

• Ionic Rare Earths is pioneering high performance magnet rare earth oxide production while securing a circular economy for REEs and Neodymium-Iron-Boron (NdFeB) magnets with a combination of advanced recycling, refining, and manufacturing capabilities.
• The company has a three pronged platform with potential operations in the U.K., Brazil and Uganda.
• Opportunities in the U.S. are also being explored.