The Chinese government approved graphite exports to Posco Future M, Korea’s only anode materials maker in mid-December. Graphite is the main ingredient in anodes, one of four critical components in electric vehicle (EV) batteries, according to JoongAng Daily, the English-language arm of JoongAng Group, one of South Korea’s major media groups.
At least three spherical and anode exporters confirmed that they have received the graphite export licenses from China’s Ministry of Commerce since the start of the regulation on December 1.
“The licenses application may slow down because we are approaching the Lunar New Year holiday. In addition, [there’s a bit of a learning curve in applying for the license for] many exporters, which might cause delays of approvals. But overall, we think that the impact on exports is limited for now,” a spherical graphite exporter in China said.
One anode producer said that they had received export approval to South Korea for part of their orders, with the applications of a few other shipments still under review.
“We doubled the exports in November, which provides us a window to apply for a license in December and January,” a source at the anode producer said.
Impact on the battery supply chain
South Korea and Japan are both major importers of China’s graphite anode raw materials, in addition to feedstock for refractories. South Korea imported about $241 million worth of artificial and natural graphite in 2022, 93.7% of which came from China, according to the country’s Ministry of Trade, Industry and Energy.
China exported 23,502 tonnes of flake graphite under Harmonized System (HS) code 25041010 in November, marking an increase of 267.85% from 6,389 tonnes a year earlier, while exports of spherical graphite (HS Code: 25041091) totaled 12,186 tonnes in November, 80.29% from 6,759 tonnes in November 2022, according to the most recent Chinese customs data.
Some market participants think that although the Chinese government has strengthened export controls on graphite items, the export impact on the battery supply chain is limited for the time being.
However, some others believe that the export control policy is adding risk to China’s graphite export market and resulting in a shift of global demand to graphite sources outside of China, considering the long review period and uncertain schedule for approval.
China’s Graphite Industry Development Alliance held an industry meeting in Beijing on Wednesday January 10, with topics related to the impact of China’s export control policy published on October 20.
Attendees at the meeting expressed concerns over the impact of the export control including potential market share changes and technological development.
“The long application period for the export license is adding pressure to the market. Although some graphite exporters have got the licenses, some have suffered heavy losses due to surging freight costs from China to Europe, order cancelations, piled up inventory and operation suspension for some producers,” a graphite producer in China said.
Slower exports weakened China’s graphite prices with increasing inventory and reduced orders from international buyers.
Fastmarkets’ price assessment for graphite flake 94% C, -100 mesh, fob China was $510-538 per tonne on Thursday January 11, down by 5.33% from the previous assessment at $530-577 per tonne on January 4.
Fastmarkets’ assessment for graphite spherical 99.95% C, 15 microns, fob China was $1,900-2,200 per tonne on Thursday, a 12-year low new low in 12, after holding stable at $2,000-2,200 per tonne for over six months.
Alternative graphite sources
Meanwhile, some international players in the industry are trying to find alternative graphite sources outside China, according to a second graphite producer.
DA Technology, a secondary battery maker in South Korea, announced that it has signed an exclusive contract for importing natural graphite with Vietnam Graphite Group (VGG) on Wednesday January 3.
In addition, Posco International, owned by South Korean steelmaker Posco, inked an agreement for long-term graphite supply from NextSource, a Canada-based graphite firm, in September.
Samsung SDI, one of the world’s largest lithium battery manufacturers, will work with Syrah Resources, an Australian graphite miner and anode producer, to test and qualify active anode material from Syrah’s Vidalia site in the United States to finalize, by no later than July 10 2024, a binding offtake agreement for up to 10,000 tonnes per year of active anode material.
Aside from the supply-demand shift in the graphite market, some industry participants think that the export control policy might affect the technological innovation of graphite anode given that breakthroughs are made through cooperation along the supply chain.
“Innovation in technology requires practice and cooperation. For a battery raw material to be used by a downstream battery maker, it requires years of testing and qualification. One needs to be in the market to improve the technology. This is how our refractories industry has grown by mutual learning from countries such as Japan, Germany and the United States in the past,” a second graphite producer in China said.
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