Large flake graphite prices settle at new equilibrium

By Simon Moores
Published: Thursday, 27 February 2014

After 18 months of stagnation, +80 mesh, 94-97% C flake graphite prices settle, in real terms, at new post-global recession high

Prices for large flake graphite have settled, in both nominal and real terms, significantly higher than the pre-global recession levels.
IM Data has calculated that a tonne of +80 mesh, 94-97% C, large flake graphite (CIF, Europe) is 22% higher than in 2008 and 52% higher today than it was in 2006, when the volatility that has defined the industry over the last eight years began.
Sellers have battled hard to retain the value created as graphite prices boomed between 2010 and 2011, when large flake prices rocketed to $2,500/tonne on the back of a strong rebound in demand which suppliers were unable to cater for in the short-term.
The price has since been eroded down by almost 50% to $1,275/tonne today, however this value remains higher than the 2006 average of $836/tonne and the 2008 average of $1,044/tonne (in real terms).
Larger flake rises likely
The second half of this year is expected to see a slight recovery in flake graphite prices.
The more positive price picture is likely to be outside of China, with greater demand expected in the European, US and Brazilian markets as their steel industries expand; while China's over production of steel in 2013 is expected prove a major burden that will hit demand for all related minerals and metals this year.
Although this is likely to surpress Chinese prices of lower quality, medium flake graphite, the graphite plant closures in Shandong are expected to have positive price implications for larger flake material, as this is China’s primary source of +80 mesh product.
Should demand rebound outside of China and these supply restrictions continue, prices are likely to rise.
Large flake graphite – a new equilibrium
2006 price      2006 in real terms      Today’s price       % difference to real terms
$660/tonne          $836/tonne                $1,275/tonne                  Up 52%
2008 price      2008 in real terms      Today’s price       % difference to real terms
$875/tonne         $1,044/tonne              $1,275/tonne                 Up 22%

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