The new-energy vehicle sector is becoming a major downstream
consumer of fine graphite flake, with solid support for the
material since the end of 2020. Intensifying global shipping
issues, China’s power crunch, its environmental
inspections and suspension of production in winter have
combined to send fine flake prices soaring in the second half
Fastmarkets’ assessments for graphite flake 94% C,
-100 mesh, fob China and graphite flake 94% C, -100 mesh, cif
Europe jumped to $700 per tonne and $755 per tonne on December
2, respectively, up by 34.62% and 24.79% from the middle of the
With demand from the anode sector set to remain strong and
ongoing uncertainty caused by the Covid-19 pandemic, graphite
flake industry participants expect the market to remain bullish
at least in the first quarter of 2022.
Solid demand, uncertain supply
According to market participants, fine flake prices in China
are likely to stay near record highs for most of the first
three months of 2022 due to solid demand for spherical graphite
production to meet growing use in anode production, supply
interruptions in major regions for production, and logistical
In addition, demand from major consuming countries, such as
South Korea and Japan, have been trending upward over the past
two years despite the Covid-19 pandemic.
Total shipments of uncoated spherical graphite from China to
South Korea and Japan were 30,040 tonnes and 14,877 tonnes from
January to October in 2021, respectively, up by 14.56% and
3.33% from a year earlier, according to China’s
Sources say that expansion of spherical graphite production in
China is also driving up demand for fine graphite flake, which
is used as a feedstock.
Total spherical graphite shipments in China’s
domestic market were estimated to be around 95,000 tonnes in
2020, in contrast with 130,000 tonnes just in the first
half of 2021.
The spherical graphite price has also been rising strongly this
year in response to demand and supply side factors, while
the battery anode market develops.
Fastmarkets’ graphite spherical 99.95% C, 15
microns, fob China was $3,100-3,300 per tonne on December 2, up
by about a quarter from $2,350-2,800 per tonne on July 1,
"Chinese spherical graphite prices are at seven-year highs, and
we would not be surprised to see the 2012 peak of $4,000 per
tonne breached over the coming years," said Amy Bennett,
Fastmarkets’ graphite analyst.
"Demand for active anode materials from the EV battery sector
is rising sharply, while Chinese spherical graphite producers
are also facing rising power costs. We expect to see upward
pricing momentum maintained well into 2022," she added.
While demand is showing strong growth, uncertainties in flake
supply from China will continue from January to March 2022
because of a seasonal halt to production over the winter period
and the 2022 Winter Olympics, sources told Fastmarkets. The
games will be held in Beijing, February 4-20.
"There is limited spot supply for flake graphite, which will
last until April of next year. Prices for flake graphite will
be at a high level considering the uncertain supply situation
in the major production region of Heilongjiang," a flake
graphite producer source in China said.
"There have been many new operation lines for spherical
graphite in the past couple of years, indicating solid demand
for flake fines as the raw material. Meanwhile, with artificial
graphite operation for anode material being interrupted by
energy controls in major production regions like Inner
Mongolia, there could be more growing space for its
alternative, natural graphite, in the future," a second flake
producer source said.
Production of fine flake is expected to remain relatively
steady despite the current high price acting as an incentive
for producers to increase their output.
"We don’t see too much other incremental supply
coming online in the short to medium term – although
there may be some increased future production in Madagascar and
also Heilongjiang," a third producer source said.
"Providing there remains robust demand from EVs, we expect
prices to be supported."
There is concern among producers to limit the volumes they
offer into the market despite the current robust demand.
Oversupply meant prices for graphite flake 94% C, -100 mesh,
cif Europe, were significantly lower before November.
"We want to maintain balance in the market and the biggest
limitation to our activity is containers and shipping line
reliability," the third producer source said.
The availability of containers and problems finding space on
vessels has hampered producers’ ability to export,
according to multiple sources.
Additionally, logistics have added significantly to the
producers’ costs if they sell on a cif basis.
Several producers in China have responded to the logistical
problems by marketing their material on a fob basis and handed
the issue of transportation over to the buyer.
Chinese exports have been hardest hit by soaring logistical
costs, but they have also risen elsewhere.
"Furthermore, logistics will remain a problem for shipments
from outside China, especially Mozambique for flake fines.
Freight costs [from Mozambique to China] have been rising to
$110-140 per tonne from $40 per tonne under normal
circumstances," the second source said.
Should the logistics problems ease for producers outside of
China, it would allow increased volumes to come on to the
market and offer prices could be lowered.
"We anticipate reduced availability from China with continued
high freight rates. However, there could be a recovery in
delivery options from Africa and this could lead to a price
reduction for these grades again, in particular for the
specific grades from Mozambique, such as -194," a fourth flake
producer source said. "Otherwise, we are assuming stable
price levels in Europe at a relatively high level for
But the importance of freight rates in setting spot prices
in China should not be overestimated, according to the third
producer source, who stated the Chinese domestic price was more
important than supply-chain issues.
"The China market is by far the largest from a supply and
demand perspective, so the price is set domestically based on
in-land delivery on a short-term spot basis. Delivery from
imports takes quite a lot longer to fulfil sales and therefore
the realization of spot prices is at a lag to the situation on
the ground in China," he said.
"As freight prices reduce, and freight availability opens up,
its unlikely the price will move at this time due to balancing
short supply conditions and strong demand growth," he
The cif Europe market could see price falls if the freight
market softens, assuming the Chinese market does not absorb the
material, according to the source.
"If freight rates do drop, then flake prices in the rest of the
world are likely to soften, providing there is enough material
and supply in China to satisfy local demand," he said.
Olympics and beyond
Fastmarkets research expects flake prices of all sizes to
remain elevated through the first quarter of 2022, at least
until after the Winter Olympics.
"We expect China’s production to remain restricted
during that period, however, from the second quarter of 2022
onwards we may see some modest downward correction in prices as
China’s production returns to more normal levels,"
"Rising demand and production restraints will limit any
potential price declines, however, with annual average prices
in 2022 expected to remain above this year’s
levels," she explained.
Once production resumes following the winter halt in
Heilongjiang, consumers in China may also increase the pressure
for prices to be reduced.
"The current high prices are unsustainable and difficult for
downstream consumers to accept. They have resulted from a
combination of extreme factors, including the power crunch,
environmental inspections, reduced shipments from outside China
and the winter halt. Things might improve when spring comes
[and operations restart in Heilongjiang]," a spherical graphite
source in China told Fastmarkets.
Traders may have sufficient inventory for the winter season.
However, refractories – the traditional major
downstream consumer for fine flakes – face pressure in
China, with steel mills’ output cut in line with
China’s decarbonization policies. Therefore, there
could be some downward adjustment in price next year, according
to one trader source in China.
The impact of the policies to decarbonize China’s
economy may also be felt on the supply side, as well as in
terms of domestic demand.
China’s position as a significant net exporter of
energy-intensive materials has been declining in numerous
markets, such as in the energy-intensive ferro-alloys sector,
according to Bennett, which has left less material available
"We can see similar developments for the Chinese graphite
industry in the coming years, reflecting both the rapid
expansion in demand for graphite from the EV battery sector and
environmental controls and persistent issues with electricity
costs and availability," she said.
While Chinese production has been hampered by rising costs and
falling flake reserves, other producers in Africa and elsewhere
sought to increase their market share.
"The domestic supply chain is about to be broken in China," a
market participant said. "We think their problems will remain
when Chinese manufacturers restart production in 2022. These
problems occurred before they stop their production and will
exist after they return."
Large flake’s strength
The first quarter of 2022 will define the outlook for the
market for larger graphite flake, according to a fifth graphite
flake producer source.
Some producers expect to increase their capacity, but this
material will be absorbed primarily in China, where supply is
"While most of the new capacity will continue to come from
outside China, for 2022 China will remain the primary location
for downstream processing. Thus the new capacities outside
China would fill the non-Chinese upstream markets to some
extent and the rest getting to China for further processing,"
Shishir Poddar, managing director of Tirupati Graphite, told
"Overall therefore, we can say that we expect to see the prices
remaining firm and diversity of source evolving through 2022,"
Industry participants agreed that large graphite flake will
Meanwhile, the shift in demand for large graphite flake from
China to overseas sources, especially Madagascar, will continue
in the near term, given the interrupted global shipping
conditions and supply tightness in China.
The graphite flake market has witnessed a major demand shift
due to soaring freight costs from China to other suppliers
since the end of 2020. The trend has developed throughout 2021
due to availability issues in China.
Fastmarkets assessed the price for graphite flake 94% C, +80
mesh (+894), fob China on December 2, 2021 at $1,200 per
tonne, which had surged by 18.81% from $1,010 per tonne at the
start of the year. Meanwhile, the corresponding cif Europe
price for +894 jumped by 39.5% to $1,395 per tonne on December
2 from the start of the year at $1,000 per tonne.
At the time of writing, the latest freight costs were about
$8,000 per 20ft container from Qingdao port to Rotterdam,
equivalent to $400 per tonne. Meanwhile, shipment costs from
Madagascar to main ports in Europe range from $50 to $90 per
tonne, subject to different ports, according to one producer
source outside China. This disparity in transportation
costs has reduced the attraction of Chinese graphite and driven
consumers towards other suppliers.
"We expect Chinese graphite exports to remain below 2018 peaks,
with non-Chinese material continuing to gain market share in
Europe, as the Chinese industry increasingly consumes greater
quantities of graphite domestically. Using Germany as a proxy
for Europe, the Chinese share of total German imports of
graphite fell from 45% in 2018 to 37% in the first nine months
of 2021, with this trend expected to continue," Bennett
Limited availability will continue to support price for large
graphite flake and the shift in demand away to the sources
outside of China will be established as the "new normal",
according to sources.
"Major refractory producers in Europe are showing interests in
diversifying their sourcing channels, especially with the
skyrocketing freight rates making it extremely costly to ship
material from China, the traditional major supplier," a second
trader source said.
"Despite limited growth for global refractories, we are seeing
the new sector of expandable graphite triggering increasing
demand for large flake graphite," the source added.