Qingdao graphite production starts to recover but prices unchanged

By Sybil Pan
Published: Friday, 14 February 2020

Graphite production in the Chinese city of Qingdao, in Shandong province, one of the country’s production hubs for flake graphite, has begun to resume gradually but with prices flat because of limited spot market activity.

Flake graphite operations in Qingdao were shut down during China’s holiday for the lunar new year, which was extended to February 10 in Shandong province as part of the measures put in place to help control the spread of the novel coronavirus (2019-nCoV) outbreak.

"Factories resuming operations should take measures to minimize the risk of infection on a person-by-person basis," a producer in Qingdao told Fastmarkets. "We are not up to full operation yet. Workers are taking shifts on a daily basis, and body-temperature should be monitored [to check for fever] among those coming in to factories."

Some factories have got back to production at about 70% of normal capacity, but there were still concerns about the continuing spread of the infection and the consequent disruption to logistics.

"We have received some inquiries recently and made offers at prices flat [from those before the break]," a trader in flake graphite said. "We are not sure when logistics will be back to normal. Our agents for land transport are not back [at work after the extended break]. We still have orders outstanding from before the holiday, but it’s not possible to ship them out at the moment."

Even when land transport becomes available, the cost of domestic freight has ticked upward by 40-50 yuan per tonne to 200 yuan ($29) per tonne, which is an increase of almost 30%.

Apart from the shortage of land transport, making shipments for export is another issue troubling traders and producers of graphite.

"We booked our schedule on February 3, but the date was then delayed to February 10," a trader in spherical graphite said. "Ships to Japan and South Korea have not been affected yet, but those to Europe are affected due to the length of the voyage, as well as cancellations on some routes."

Most market participants have only recently returned to work and were fulfilling contracts signed before the holiday, so only limited spot market activity has been reported. Prices of all graphite grades were flat from where they were at the end of 2019, but there may be signs of change by the end of February, according to sources.

Fastmarkets’ latest assessment of the price for graphite flake 94% C, -100 mesh, fob China, was $540 per tonne on Thursday February 13, flat since the end of August 2019.

On the same day, the price of graphite flake 94% C, +100 mesh fob China, was at $690 per tonne, unchanged since early November, with supply tightness continuing.

"We have enough inventory for -194 [Graphite flake 94% C, -100 mesh], but not enough for +194 [Graphite flake 94% C, +100 mesh]," a second flake graphite producer in Qingdao said. "There might be some price adjustment when market activity is back to normal, if the coronavirus can be brought under control."

For graphite amorphous 80% C, -200 mesh, fob China, the price was assessed at $320-340 per tonne on February 13. Producers of amorphous graphite cite low inventory as supporting the price until operations get back to normal.

In addition, the price of graphite spherical 99.95% C, 15 microns, fob China, was $2,500-2,600 per tonne, unchanged since late August last year.

In Heilongjiang province, another production hub for graphite, production was still halted due to the extremely cold winter weather.

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