China has historically played the role of puppet-master in
the global graphite industry, due to the sheer size of its
output and the heavy investment it has put into the sector. But
the growth of strategic end-markets such as batteries may now
support a shift in market share toward other origins.
The graphite market continues to be characterized by
uncertainty of supply flows from China, while production
volumes from other regions are on the rise because of the firm
After an eventful 2017, when production areas across China
were affected by government-imposed inspections and widespread
shutdowns, 2018 seems to be promising more of the same.
Shandong province, the leading producing area for graphite
in the East Asian country, saw another round of temporary
factory closures in late May, local sources confirmed to
The shutdown, officially the first in 2018, was in
preparation for a government summit to be held in Qingdao in
June. This situation followed a familiar pattern, seen on
previous occasions: in the run-up to important events,
authorities prevent local heavy industry from operating in
order to improve weather conditions.
Producers in the province saw the clampdown coming but, at
the time of writing, specific details about how long the
limitations might last have been scarce. One local company said
that it had been told to halt operations but "with no clear
Market prices have so far remained stable, despite the
latest issues, but producers say that the prices of some grades
may show upticks if the current supply situation persists.
One producer said that the price of spherical graphite,
specifically, would "move up further on supply tensions" in the
Flake graphite prices have so far remained stable, after the
rises seen in previous months.
Market prices holding
Graphite prices were shaken-up in the second half of 2017 in
a way that the sector had not seen in many years.
While graphite supply from China was drastically curtailed,
steelmaking saw a progressive rebound after prolonged
stagnation. And with that rising steel output, the demand for
refractory raw materials, including graphite, surged.
This all made for a rapid rise in the market prices for
Industrial Minerals assessed the price of Chinese flake
graphite, 94-97% C, +80 mesh, at $1,050-1,210 per tonne fob
Qingdao on June 7. The price of this grade has appreciated by
45% since this time last year.
Similarly, +100 -80 mesh material, of the same purity level,
was priced $800-940 per tonne, up by 30% from last year.
And -100 mesh material, also of the same purity, was trading
at $655-790 per tonne, or 30% higher than in June 2017.
Spherical graphite prices were slower to react to the
reduced output situation. Prices were flat or falling
throughout 2017, before seeing repeated upticks in early
The end-markets again played a part. The growth in demand
from the battery sector in 2017 contributed to the clearing of
high inventories, and supported prices.
The price of uncoated spherical graphite, 99.95% C, 15
micron, was assessed at $2,800-2,900 per tonne fob China on
June 7. This was higher by an average of $375 than at the
beginning of the year.
But prices are just one component in the overall picture.
Industry sources are adamant that the volatility that has been
seen in the recent past was exacerbated by the fact that one
country supplies so much of the international market. This,
they claimed, must change.
End to China’s dominance?
At the 24th Industrial Minerals Congress in Barcelona,
Spain, which concluded on June 7, one topic of discussion among
delegates was China’s future role in the global
graphite supply chain.
Far from it being a new viewpoint, many in the industry have
been warning for some time that the current situation, in which
China is seen as the main market maker, is an imbalance that
could threaten security of supply.
And as we saw last year, with the drastic cuts in output
from China, this threat is real.
The country accounts for more than 60% of natural flake
graphite supply to the market, and is the single largest
exporter of the mineral. But delegates in Barcelona asked
whether it is going to be able to maintain that position.
"If they continue to reduce output the way they have done,
something will have to give," one delegate said.
"With adequate market conditions, it is economical to
produce and sell graphite outside China," another added,
listing a number of new projects in the pipeline or near
Syrah Resources’ own Balama graphite site in
Mozambique is the leading example now in operation, but others
are set to follow.
East Africa is poised to become a new hub for graphite
supply, delegates said at the Congress. Other than Balama,
several projects are in development in Tanzania and in
Madagascar. In the south-west, Imerys and joint venture partner
Gecko Graphite Namibia have been investing in
Namibia’s Otjiwarongo graphite project.
"Yes, China is still the largest player in graphite, but
it’s not far-fetched to imagine a more balanced
share in market composition," another delegate said.
Others pointed to China’s rising profile as a
graphite importer – which, until recently, was
minimal. And yet, imports of graphite into China are growing,
to feed its large domestic demand for multiple end-uses.
With the battery industry continuing to grow, and with China
and South-east Asia in the forefront as a global
battery-manufacturing hub, demand for graphite feedstocks
suitable for processing into anode material usable in batteries
is also due to increase. But if production were to be curtailed
further, as we have seen last year and this year, local
consumers may feel it worth their while to look for suppliers
outside the country.
Syrah’s deal with anode manufacturer BTR New
Energy Materials is a telling step in this direction.
Additionally, the new focus in Europe and the United States
on setting up their own local battery-making capacities would
support the development of new graphite operations able to
serve those industries.
"Each 'wanna-be’ battery hub, including North
America and Europe, will have to secure preferential sources of
supply, which should not be China," one delegate in Barcelona
said, noting that developing projects in East Africa, Canada
and in the US itself could be crucial.