Graphite prices show resilience amid growing demand-side concerns
Covid-19 lockdowns in China together with the geopolitical impact of the Ukraine-Russia war continue to dampen demand for EVs battery raw materials such as graphite; logistical issues and high container costs are also creating supply-side concerns
Graphite pricing stability persisted again in the final week of May, with prices showing resilience amid growing demand-side concerns. The Covid-19 lockdowns in China together with the geopolitical impact of the Ukraine-Russia war continue to dampen demand for electric vehicles (EV), and in turn EV batteries, and key battery raw materials including graphite.
Supply-side concerns, however, have also yet to be resolved, with logistical issues and high container costs for material from both Africa and China supporting prices, while news that graphite production in Heilongjiang province is due to resume at more normal levels was offset by news that environmental inspection teams are halting operations in Luobei county from May 18.
Price remains unchanged
Amid strong underlying fundamentals, and with offsetting supply and demand factors, Fastmarkets’ graphite price assessments remain unchanged. Graphite flake 94%C, -100 mesh, fob China remains at $830 per tonne, with graphite spherical 99.95%C, 15 microns, fob China at 3,500-3,800 per tonne. European prices are also steady with graphite flake 94%C, +100 mesh, cif Europe at $1,400 per tonne.
China graphite prices
Amorphous graphite prices surged amid a recovery in demand from downstream steel producers, with mills switching to amorphous graphite as a replacement for anthracite and pet-coke.
Flake graphite prices were unchanged but tightness has eased with the ending of seasonal winter stoppages in Heilongjiang and amid low liquidity in the refractories sector.
Supply concerns continued with environmental inspection teams halting operations in Luobei county from May 18.
Spherical graphite prices remained stable on sound demand from the anode sector.
European graphite market
Tight supply from China and rising global logistics costs drove the amorphous graphite market to a new multi-year high.
Graphite importers seeking to save money using breakbulk transportation have found that the savings compared with shipping in containers have narrowed to as little as $50 per tonne.
Logistics problems for shipping from Africa have continued, with market participants reporting high costs for containers, around $6,000 per container, and delivery times of two months.
Anode production rises to meet EV battery demand
Chinese anode production is rising rapidly to meet surging demand from the EV battery sector, with impressive growth evident in early 2022, following strong advances in 2021. According to data from ICCSino, Chinese anode production exceeded 90,000 tonnes in March 2022, with production in Q1 2022 reaching 251,000 tonnes, up 81% year-on-year from 139,000 tonnes in Q1 2021. After nearly doubling in 2021 to 677,000 tonnes in 2021, Fastmarkets is forecasting Chinese anode production to exceed 1m tonnes in 2022.
Impressive growth in anode production in China both in 2022 and in the coming years will keep graphite prices, particularly spherical graphite and fine flake graphite prices, elevated this year and through 2025 at a minimum, given delays to new junior miner graphite projects as well as issues affecting synthetic graphite supply including environmental concerns, rising costs, and a shortage of graphitization capacity.
While near-term downside risks to pricing remain, reflecting temporarily reduced demand in China in response to Covid-19 lockdowns and the potential increase in graphite production in the Heilongjiang region, as well as concerns regarding the Ukraine-Russia war, we maintain the view that graphite prices will remain on an upward trajectory for the majority of 2022.