Chinese spherical graphite exports at seven-year high on surging EV demand

By Davide Ghilotti
Published: Friday, 16 March 2018

The increase in demand for the material, a major main component in battery anodes, follows a surge in production forecasts for electric vehicles (EVs) by automakers in leading markets including China and Europe.

Chinese exports of spherical graphite (SG) reached a seven-year high in 2017 and demand has continued to grow into this year, with a surge in January consignments, the latest customs data shows.

Exports of spherical graphite, including uncoated and coated material, of 40,871 tonnes last year was up 25% on the previous year.

The 2017 total was also the highest since at least 2011, which is as far back as Industrial Minerals’ records date.

The increase follows rapid growth in battery end-markets, which reflect ambitious targets for production and sales of electric vehicles (EVs) among major automakers in leading markets including China and Europe

China will produce more than 1 million units of new EVs domestically in 2018, further supporting demand for raw materials such as lithium, cobalt and graphite.

The uptrend in SG trading continued into early 2018. Exports of SG in January this year surged to 5,238 tonnes, for a value of $15.77 million. This was up 92% year on year in volume terms and up 71% in value terms on last year.

In value terms, however, the performance was mixed. While total value in 2017 at $126.55 million was 3% higher than $122.16 million in the previous year, the rate of growth essentially reflected the higher export volumes.

The average unit value of the material, instead, declined. The average unit price was $3,096 per tonne, according to China Customs figures, a drop of 17% from the average of $3,748 per tonne in 2016.

In previous years, unit values were higher despite lower overall volumes being traded.

China total SG exports GRAPH 2015-17 FY  

This suggests a persistence of the supply/demand imbalance that, over the last few years, has characterized the SG market, which has been dogged by overcapacity.

Chinese regional governments had been encouraging widespread production of both uncoated and coated spherical material from local companies to serve the battery sector. This encouraged the domestic graphite industry, which is fragmented and dominated by small firms, to seek in greater numbers to benefit from tax breaks and favorable conditions. 

Demand from battery makers had not increased as rapidly, leading to supply of material that end-markets could not absorb. In turn, this brought about a progressive decrease in SG prices. The latest decline in graphite export value in the customs data shows how this remains a determining factor.

Prices have, similarly, been sluggish. Industrial Minerals assessed Chinese uncoated spherical graphite, 99.95% C, 15 microns, at $2,250-2,700 per tonne fob China as of March 1 compared with $2,500-3,000 per tonne in January last year.

Coated SG declines

While total exports closed the year on a high, the performance of Chinese coated SG told an altogether different story.

Total exports of this material (HS code 38019010) stood at 3,805 tonnes last year, down 17% from 4,609 tonnes in 2016 and down from 3,976 tonnes in 2015.

In value terms, 2017 exports generated $25.49 million, a 14% drop from $29.62 million in 2016 and down from $25.99 million in 2015.

China mainly sells SG in its uncoated form to other destinations in Southeast Asia, such as Japan, where the coating is applied. Chinese exports of coated SG are, for comparison, much lower.

Graphite remains the primary component of the lithium battery anode in mainstream battery chemistries (LMO, LFP, NCM, NCA) in use today. It can also be found in small volumes in the cathode as a conductivity enhancement additive.

Chinese coated SG exports GRAPH 2015-17 FY