The price of small flake graphite – graphite flake
94% C, -100 mesh (-194) – fell repeatedly from the
first half of 2019 to the beginning of the fourth quarter of
2020 amid oversupply, weak demand and the fallout from the
Fastmarkets’ price assessment for -194 fob China
material was $630 per tonne on March 28, 2019. The price then
dropped by 31.75% to hit a steady bottom of $430 per tonne in
July-October 2020, while supply exceeded demand.
When supply tightened and excess material dried up in the
market, the price gradually recovered to $560 per tonne by
late January 2021. It has remained stable since then, with
support from the seasonal winter stoppage of operations in
Heilongjiang province, a Chinese production heartland.
There were indications, however, that the current balance
would be disturbed when material from Heilongjiang and
elsewhere returns to the market. Indeed, the price for -194
material was assessed at $550 per tonne on March 25 this
year, down by 1.79% from the previous week.
The picture for large graphite flake – 94% C, +80
mesh, fob China (+894) – was different because the
share of the material that is used in graphite processing
accounts for about 20% of total flake graphite supply,
according to market sources.
The fob China price of +894 material went through a downward
trajectory in 2019 and the first quarter of 2020, holding at
a two-year low of $820 per tonne from August 2019 to March
last year. The market recovered to reach $1,080 per tonne in
March 2021 on growing supply tightness.
While the market was relatively firm for the time being,
sources doubted that the current market performance of both
large and small flake varieties would be sustainable over the
second half of 2021, given evolving market dynamics. The
first indications of weakness were identified on March 25,
when Fastmarkets’ price assessment for +894
material fell by 0.93% to $1,070 per tonne.
Supply – China and outside
Production of fine flake material outside of China soared in
2019 when Syrah Resources began commercial production at
Balama in Mozambique. But following the halt in
Syrah’s graphite operations last March, in
response to the Covid-19 pandemic, the flake graphite market
has been increasingly balanced, especially for flake fines.
Since then, China has resumed its previous dominance as the
world’s major exporter of graphite, with
production accounting for an estimated 62% of total world
output last year, according to the annual update from the
United States Geological Survey (USGS). Over the past winter in
the East Asian country, there has been a seasonal halt in
production. And this significant cut in output has given added
support to the flake market.
The expected restart of operations in two areas with strong
graphite flake production capacity – Jixi city in
April, and Luobei county in Heilongjiang in May –
might add sufficient supply to disrupt the current market
stability, market sources said. "There’s no
shortage of small flake graphite, especially in Luobei county.
It is clear to see where the market is likely to go in April,"
a graphite producer in China said.
About 500,000 tonnes of graphite concentrates were produced
last year in Luobei county, enough to meet 62.5% of
China’s annual flake demand, according to one
source. Downstream production, including spherical graphite for
anode manufacturing, reached 270,000 tonnes, sources told
Meanwhile, Syrah Resources restarted flake production in
March and plans to achieve output of 15,000 tonnes per month.
The company has told Fastmarkets that it is committed to
adjusting its production according to market conditions, to
avoid a return to oversupply.
But there were concerns among some market participants about
the volumes of flake graphite that would accumulate over the
next few months. "Supply from Syrah might not affect the
graphite market in the first half [of 2021], given the lead
time of one to two months, but the market could be under
pressure in the second half of the year," a flake graphite
Soaring freight costs from China to major overseas markets
could weigh on China’s fob export and domestic
prices. One-third of seaborne demand in China could shift to
other sources, increasing the supply in the domestic market,
according to the producer.
High freight costs can be expected to support the cif
While there were indications that the fob China fines market
may soften, there may also be downward pressure on prices
for larger flake sizes in China. "A change in the market [for
+894 material] could be attributed to weaker demand from the
expandable graphite sector, as well as increasing shipments
from areas outside China, such as Madagascar," a second
graphite producer in China said.
The numbers of inquiries from the expandable graphite sector
in the rest of the world have been steadily rising, according
to a producer outside China. Imports of flake graphite from
Madagascar into China, which were mostly larger flake graphite,
soared to 7,646 tonnes during January and February 2021, from
only 138 tonnes a year earlier, according to Chinese customs
This followed the expansion and marketing of
Madagraphite/Établissements Gallois. Both Tirupati
Graphite and Madagraphite/Établissements Gallois have
programs to ramp-up their outputs from Madagascar.
While supply was expected to grow in the remaining months of
2021, market participants expressed concern over downstream
demand for flake fines in particular. Applications for fine
flake graphite include the traditional refractories sector, and
spherical graphite production for anodes.
"While there is high demand for spherical graphite
production," a third producer in China said, "the flake fines
market will be under pressure if the recovery of the
refractories sector is slow."