Graphite supply squeeze sparks China price rises
Published: Wednesday, 07 May 2014
List prices increase significantly despite slack demand; fears that Heilongjiang flake graphite action could spread to cleaner areas
China's flake graphite mining suspensions are causing
some suppliers to increase list prices in anticipation
of a possible supply squeeze.
Major government-enforced shut downs in Shandong province and
impending closures in Heilongjiang, due to unacceptable air and
water pollution levels, have led some producers to hold back
from the market in the hope that a tightening of supply will
induce price rises.
A major producer in China explained to IM Data
that its list prices, across-the-board, have been increased by
between RMB 1,000/tonne ($160*) and RMB 1,500/tonne ($240) as a
direct result of the potential closures.
Considering flake graphite prices in China for 94-97% C,
-100 mesh can vary from $650-750/tonne, this could
represent increases of up to 30%.
The move appears geared to exploit any
notable upturn in demand as the Chinese buying season
Nevertheless, todays demand is still very weak across all
major global markets. This is the first time the industry has
seen such a significant demand slump from all markets and all
regions of the world at the same time.
The prices quoted to us are yet to be submitted to IM
Datas price database, as they are not reflective
of confirmed deals in the market. Should even a small amount of
demand activity return, however, there is a high risk of panic
buying a major contributing factor to the price spike
seen in 2011.
There is also a secondary risk that demand from refractories
could return to significant levels at the same time as
increased consumption from the battery sector. As both
end-markets compete for the same raw material medium
flake graphite, 94% C (-194) this could add further
upward price pressure.
Heilongjiang pressures: spread to
Imminent flake graphite closures in the worlds leading
producing region, Heilongjiang, have now gained global
attention from the story that was broken by IM
Data and later picked up by Chinas
national, English speaking news channel, CCTV.
There are now fears in China that the governments focus
on the worst offending area, Jixi, could spread to the cleaner
producing area of the province, Luobei.
Jixi and Luobei together accounted for 45% of Chinas
220,000 tpa flake output in 2013.
A recent rumour, which has contributed to these fears, is that
China is sending central government representatives to the
region to monitor the situation. Any action from the central
government as opposed to the provincial government which
tends to be more forgiving could escalate the
While sources close to IM Data have
corroborated this news, there are yet to be confirmed reports
of any meetings between high level representatives.
The developments have forced buyers to look towards smaller,
peripheral graphite producers outside the
country's major graphite hubs, Heilongjiang and Shandong.
This has led to a rise in enquiries within the smaller
producing provinces of Hubei, Hebei, and Hunan.
*Conversions made as of May 2014
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