Yunnan Shanshan fires up new graphite anode project amid challenging market conditions

Yunnan Shanshan, a subsidiary of major graphite anode producer Shanshan Technology, started production at its new manufacturing base in China’s Yunnan province on Friday June 30

The 9.7 billion yuan ($1.3 billion) integrated graphite anode project was announced last year and is being built in two phases. The first phase, with planned capacity of 200,000 tonnes per year, has since started production, while construction of the second 100,000-tonne phase has yet to start.

Yunnan Shanshan believes that the green energy opportunities in Yunnan province provide major advantages to its anode material production amid China’s carbon neutral push and the wider energy transition, a source close to the company said.

Yet the move also comes at a time when the graphite anode market is contending with bearishness arising from slow demand from the new energy vehicle (NEV) market and expanding capacity for synthetic graphite, which, along with natural graphite, constitutes a major market share of the anode industry.

Indeed, China’s graphitization capacity, an important process in synthetic anode production, more than doubled to over 2.3 million tonnes in December 2022 from 1 million tonnes in March 2022, with another 1 million tonnes of graphitization capacity being added in the final quarter of 2022, according to data from Chinese news provider BAIINFO.

This overexpansion, together with slowing demand from the NEV sector, has resulted in tumbling synthetic anode prices since the second half of last year. This in turn has put pressure on the natural graphite market owing to the former’s ability to be used in place of natural graphite.

For instance, Fastmarkets’ weekly price assessment for graphite spherical 99.95% C, 15 microns, fob China stood at $2,000-2,200 per tonne on June 29, stable since the start of June, but down by 40.85% from a year earlier.

Additionally, mid- and low-end synthetic anodes were at discounts of 1,800 yuan ($249) per tonne and 2,700 yuan per tonne respectively to their natural graphite counterparts at the end of June. This compares with the premiums of 6,600 yuan per tonne and 12,800 yuan per tonne held by the former against the latter at the start of the year, according to market sources.

Therefore, while some participants expect the anode market will improve slightly in the second half of 2023 with high inventories slowly being consumed, others think that the oversupply in synthetic anode capacity will offset any demand growth and pressurize the graphite markets, both synthetic and natural, for the rest of the year.

“The oversupply in synthetic anode is bound to affect the expansion of natural graphite share in downstream anode production. Anode producers are only willing to increase the consumption of the natural material when there is a spread wide enough between the two raw materials given the better performance of the synthetic graphite,” a trader of natural graphite in China said.

Some industry participants believe that the added capacity from Yunnan Shanshan will also result in increasingly fierce industry competition in the near term considering the prevailing oversupply.

“[The idea for the project was driven by] high graphitization costs pressurizing producers’ marginal profits between the second half of 2021 and the first half of 2022. However, the start of production at the project adds to the current market weakness amid the slow demand and excess supply,” an anode producer source in China said.

Understand the dynamics of the graphite market

Keep up with the latest news, market intelligence and trends in the graphite market when you visit our dedicated graphite market page.

Get an in-depth, 10-year view into where and when graphite supply will come online with our graphite long-term forecast.

What to read next
Read Fastmarkets' monthly battery raw materials market update for May 2025, focusing on raw materials including lithium, cobalt, nickel, graphite and more
Cobalt Holdings plans to acquire 6,000 tonnes of cobalt. Following their $230M London Stock Exchange listing, this move secures a key cobalt reserve. With the DRC’s export ban affecting prices, the decision reflects shifting industry dynamics
The recent US-China agreement to temporarily reduce tariffs is a major step for global trade, with tariffs on US goods entering China dropping from 125% to 10% and on Chinese goods entering the US decreasing from 145% to 30% starting May 14. While this has boosted markets and created optimism, key industries like autos and steel remain affected, leaving businesses waiting for clearer long-term trade policies.
The US-China trade truce announced on May 12 has brought cautious optimism to China’s non-ferrous metals markets, signaling a possible shift in global trade. Starting May 14, the removal of additional tariffs has impacted sectors like battery raw materials, minor metals and base metals such as zinc and nickel, with mixed reactions. While the improved sentiment has lifted futures prices and trade activity, the long-term effects remain unclear due to challenges like supply-demand pressures and export controls.
Brazil is expected to become a reference in low-cost hard-rock lithium production and an investment hub for foreign companies. But some internal challenges remain for the country, such as funding and legal uncertainties, market participants told Fastmarkets.
Fastmarkets has partnered with the Intercontinental Exchange (ICE) to launch a series of cash-settled lithium, spodumene and cobalt futures contracts that will be settled against Fastmarkets assessments.