Graphite demand from EV battery sector forecast to rise over 35% in 2022

The supply-demand balance has been updated based on our expectations for growth from the EV battery sector

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Fastmarkets’ assessments of graphite prices were unchanged over the past week, and we expect to see stable pricing persist in China well into February, reflecting both the Lunar New Year holiday and the Beijing Winter Olympics, which will subdue both supply availability and demand from battery makers.

Fastmarkets’ graphite supply-demand balance has been updated based on our upwardly revised expectations for growth from the electric vehicle (EV) battery sector. Our forecasts for EV battery production indicate demand for graphite from the battery sector will rise by 36% to approximately 594,000 tonnes in 2022 from around 437,000 tonnes in 2021.

We will need to see rising production of both synthetic and natural graphite to meet the battery sector’s graphite needs this year. We expect to see gains in synthetic graphite production in China, in particular, where the majority of battery anode production is based. Challenges to increased production of synthetic graphite, however, remain centered on both power supply and cost as well as adequate graphitization capacity.

We expect to see increased natural graphite production from the world’s leading producers, China and Mozambique. Existing natural graphite producers will need to increase production to cover rising demand over the next several years while new natural graphite projects remain in various stages of development and as they ramp up to viable production levels.

We believe the graphite industry will successfully boost production to meet rising demand, but the market will remain tightly balanced with periods of supply shortfalls during 2022 triggering higher prices. With Syrah Resources reporting a second consecutive quarter of constrained graphite production and sales due to container shortages in the fourth quarter of 2021, we also expect to see shipping issues impact graphite availability, prompting supply shortfalls and higher prices well into the first half of 2022.

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