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 support a shift in market share towards other
The graphite market continues to be characterized by
uncertainty of supply flows from China while production volumes
from non-Chinese players are rising amid firm market
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
Shandong province, the leading producing area for graphite
in the country, saw another round of temporary factory closures
in late May, local sources confirmed to Industrial
The shutdown, officially the first in 2018 to date, is in
preparation of a government summit to be held in Qingdao in
June. This followed a familiar pattern that has been seen on
previous occasions: in the run-up to important events,
authorities prevent the local heavy industry from operating, in
order to improve weather conditions.
Producers in the province had seen it coming and, at the
time of writing, specific details over how long the limitation
may last for have been scarce.
One local company said that it had been told to halt
operations but "with no clear timeline."
Market prices have so far remained stable despite the latest
issues but producers say some grades may increase if the
situation were to persist.
One producer said spherical graphite, specifically, "[would]
move up further on supply tensions" in the near term.
Flake graphite prices have so far remained stable after the
appreciation of previous months.
Market prices holding
Graphite prices have been shake-up since the second half of
2017 - something the sector had not experienced in many
While supply from China was drastically curtailed,
steelmaking saw a progressive rebound after a prolonged
stagnation. With rising steel output, demand for refractory
raw materials, including graphite, surged.
This all made for a rapid appreciation of market prices.
Industrial Minerals assessed Chinese flake graphite, 94-97% C,
+80 mesh, at a price of $1,050-1,210 per tonne fob Qingdao on
June 7, up 45% since this time last year.
Similarly, +100 -80 mesh material of the same purity level,
was priced $800-940 per tonne, up 30% on last year.
And -100 mesh material, also same purity, was trading at
$655-790 per tonne, or 30% higher than June 2017.
Spherical graphite prices were slower to react to the
reduced output situation. Prices had been flat or falling
throughout 2017 prior to repeated upticks in early 2018.
End markets again played a part. The growth in demand from
the battery sector in 2017 contributed to the clearing of
previously-built 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, an average of $375 higher than at the beginning of the
But prices are just one component of the overall picture.
Industry sources are adamant that the volatility that was
seen in the recent past was exacerbated by the fact that one
country supplies so much of the international market. This,
they claimed, has to change.
End to China’s dominance?
At the recently held 24th Industrial Minerals Congress in
Barcelona, Spain, one point of discussion among delegates was
China’s future role in the global graphite supply
Far from being a new viewpoint, many in the industry have
been pointing for some time to the current situation of
dependence on China as main market maker, warning that this
imbalance may put security of supply at risk.
As we saw last year with the drastic cut in output from
China, this threat is real.
The country accounts for more than 60% of natural flake
supply to market and is the single largest exporter of the
mineral. But can it maintain its position, delegates asked in
"If they continue to reduce output the way they have done,
something will have to give," one delegate said.
"With the adequate market conditions, it is economical to
produce and sell graphite outside China," another added,
listing several of new projects in the pipeline or near
Syrah Resources’ Balama graphite site in
Mozambique is the leading one now in operation but others are
set to follow suit.
East Africa is poised to become a new non-Chinese hub for
graphite supply, delegates said at the Congress. Besides
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.
"China is still the largest player in graphite but
it’s not far-fetched to imagine a more balanced
share in market composition," the second delegate said.
Others pointed to the country’s rising profile
as a graphite importer, which, until recently, was unheard
of. And yet imports of graphite into China are growing to
feed its large domestic demand for multiple end uses.
As the battery industry continues to grow (with China and
South-east Asia in the lead as a global battery-manufacturing
hub), demand for graphite feedstocks suitable for processing
into anode material usable in batteries is also due to
increase. If production were to be curtailed further, as was
the case last year and this year, local consumers may find
value in looking for suppliers outside the country.
Syrah’s deal with anode manufacturer BTR New
Energy Materials is a notable step in this direction.
Additionally, Europe’s and the US’
new focus on setting up their own local battery-making capacity
would support the development of new graphite operations able
to serve those industries.
"Each wannabe battery hub, including North America and
Europe, will have to secure preferential sources of supply,
which should not be China," one delegate commented, noting
that developing projects in east Africa, Canada and in the US
itself, could be crucial to this purpose.