British importers stockpiling graphite ahead of Brexit

By IM Staff
Published: Wednesday, 03 April 2019

  • UK customer orders surge by up to 300%
  • High-purity specialty grades affected
  • Relatively low volumes fail to move prices

Rose Pengelly

British companies are understood to be stockpiling natural graphite ahead of Brexit as uncertainty mounts over trade arrangements once the United Kingdom leaves the European Union.

Official import data for the UK for the first three months of 2019 has not yet been published, so volume increases cannot be verified, but some market participants say they have seen up to a 300% jump in orders from British customers since the beginning of this year.

"We are not worried, but we are not sure how [Brexit] will affect our business in the long term," one supplier said. 

"It is having an effect right now," another market participant admitted. "We are seeing some customers in the UK trying to build up stocks because they don’t know what will happen after Brexit."

The reported tonnage increases are still relatively small, in the tens of tonnes, and the rise in demand from the UK has not been enough to influence index prices. 

Customers have mostly been stockpiling high-purity specialty grades, sources said, including those for use in expandable graphite applications, such as flame retardants and packaging.

Although most of this graphite originally comes from China, it is typically brought to the UK by European trading companies and is often warehoused in mainland Europe before being sold on to British customers.

There has been no impact on the battery graphite supply chain because there are no significant battery production lines in the UK.

Traders said they had not automatically increased prices for British customers, even though they had experienced some difficulty in meeting their requirements at such short notice, but noted that there had been flexibility for price negotiation in some contracts.

"In the end, it makes no difference, because if they fill their stocks now, they won’t fill them for the rest of the year," one supplier said. 

Not all of the UK’s natural graphite importers have begun stockpiling, with some adopting a wait-and-see approach, market participants noted.

At the time Fastmarkets Industrial Minerals Magazine went to press, it seemed likely that the UK would seek an extension to Brexit beyond the March 29, 2019, withdrawal date. 

UK import tariffs on natural graphite are currently set at 0%. This is likely to remain the case even if the UK leaves the EU without a deal under the "Temporary rates of customs duty (tariffs) on imports after EU Exit" plan published by the UK government on March 13, although the longer-term situation remains unclear.