Chinas flake graphite mining
suspensions are causing some suppliers to increase list prices
in anticipation of a possible supply squeeze.
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 have increased
by between Chinese renminbi (Rmb) 1,000/tonne ($160*) and Rmb
1,500/tonne ($240) as a direct result of the potential
The prices quoted are not seen as
indicative of confirmed deals in the market. Accordingly,
IM Data has retained its existing price
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.
Should even a small amount of
demand activity return, however, there is a risk of panic
buying - behaviour that was a major contributing factor to the
graphite price spikes seen in 2011.
With industrial markets showing
slow signs of recovery, 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
There are now also fears in China
that the governments focus on the worst offending area,
Jixi, could spread to the cleaner producing area of the
Jixi and Luobei together accounted
for 45% of Chinas 220,000 tpa flake output in 2013.
*Conversions made May 2014
Comprehensive data and
analysis for global mineral industries. Graphite and Fluorspar
Simon Moores, Manager
Andy Miller, Analyst
Albert Li, Analyst