With at least 30% of the mass of battery anodes composed of graphite, the industrial mineral has been generating increased interest from the industry; suppliers hope the rapid expansion of the electric vehicle (EV) sector will have a bullish effect on graphite too.
The international graphite market of late has been shaped by factors including: China’s volatile output of spherical graphite due to environmental restrictions; the growing production of natural graphite outside China; rising demand from traditional as well as new end markets; and new patterns in trade flows.
Here is a closer look at some of these themes affecting graphite.
Chinese policy and graphite processing
Environmental inspections tightened domestic supply of spherical graphite in China last year, which put pressure on prices and kept market offers firm.
In May, government inspections ahead of the international Shanghai Cooperation Organization (SCO) summit, which began early in June in Qingdao, forced spherical graphite producers in Shandong province to suspend operations. The shutdown lasted in some cases for up to two months.
This year, the spherical graphite industry may suffer a second round of strict environmental assessments, the country’s environmental watchdog warned.
Fastmarkets’ price assessment of uncoated spherical graphite, 99.95% C, 15 microns, has held at $2,800-2,900 per tonne fob China since the second quarter of 2018 after increasing from $2,250-2,700 per tonne at the start of that year.
EV fundamentals supporting demand
The rapid development of the domestic EV sector in China has bolstered the supply chain of the feedstock, supporting spherical graphite production and prices.
According to the China Association of Automobile Manufacturers, production and sales of new EVs in the first two months of this year totaled 150,000 units and 148,000 units, up 83.5% and 98.9% respectively from a year earlier.
The fundamentals of the EV sector are bound to support spherical graphite demand throughout 2019, market sources told Fastmarkets.
Security of supply and non-China origins
The international automotive industry is keen to establish alternatives to China as a source of graphite, mainly citing security of supply. The feedstock is one of several raw materials that both the United States and Europe have deemed to be “critical.”
Although China has historically been the largest producer and exporter of graphite products, appetite for non-Chinese supply is supporting new developments. Mozambique has been ramping up output but new projects are in development in, among others, Tanzania and Canada.
These will inevitably reshape the global market but also raise the question of how strong an ex-China graphite industry must be against a producer that has been historically aggressive on price and remains focused on holding onto its leading role.
China’s growing imports
Although China has historically imported negligible volumes of natural flake graphite - they formerly amounted to a few hundred tonnes per year - from minor players such as North Korea, the trend is now dramatically changing.
A depletion of local resources of the mineral following decades of unregulated extraction in some main areas, such as Shandong, and growing demand from expanding sectors - chiefly batteries - have generated the need to top up domestic availability with foreign product. Imports have grown exponentially as a result.
In the first 11 months of 2018, imports of flake graphite of 50,770 tonnes were up more than a twelvefold on the 4,184 tonnes imported in the corresponding period of 2017.
Some of the most bullish participants go as far as suggest that China could turn into a net importer of the mineral, although this may take some time to eventuate.
You can hear more about these and other developments in the graphite market at Battery Materials 2019, which takes place over April 10-12 in Shanghai. Find out more at metalbulletin.com/events/batterymaterials.
Also in the Battery Materials Blog series:
Graphite has so far not experienced the stellar price growth that was first evident in lithium and then in cobalt, two other key feedstocks for battery materials, but it may not be long before it starts to catch up.