Natural & Synthetic Graphite

Outlook to 2028, 12th Edition

Graphite prices remain high as supply-side shortages combine with growing battery and electrode demand.

High flake graphite prices spur new development outside of China

Despite some downwards re-adjustment towards the end of 2018, graphite prices remain high, with February prices for 94-97%C fine, medium and large size flake still 17%, 24%, and 31% above September 2017 prices – at a time just before prices began to rise from their lowest point. Prices increased through late 2017 and again in early 2018 as rising demand for flake graphite from the lithium-ion battery industry coincided with Chinese environmental inspections and temporary processing plant closures.

Higher prices through 2018 have encouraged further development of flake graphite projects outside of China. During Q4 2018 and early 2019, at least three projects have completed feasibility studies and another updated its existing feasibility study. Several others have completed prefeasibility studies, scoping studies, or resource updates. Meanwhile, Syrah Resources is one step closer to downstream production outside of China, having installed 5ktpy of milling equipment at its Louisiana battery Anode Material (BAM) plant and produced its first un-purified product in December 2018. 

For now, China remains the centre of the graphite industry

There is robust growth in demand for spherical graphite, the intermediate product processed from flake graphite for use in lithium-ion battery anodes. Commercial-scale production has so far been limited to China, however, because of high production costs and the use of strong acids and other reagents. A number of companies outside China are trying to develop a non-Chinese spherical graphite supply chain, perhaps using more-environmentally-sound methods, but have yet to prove competitive with China at a commercial scale.

China continues to dominate graphite production and demand. Almost all stages of the lithium-ion battery manufacturing chain are focussed on China and China is by far the largest and most rapidly growing market for lithium-ion batteries.

Both synthetic and natural graphite compete for use in lithium-ion battery anodes, along with an increasing amount of needle coke and other existing carbon materials. Demand for raw material graphite in battery applications is forecast to grow by 17-23%py over the decade between 2017 and 2027.

China looks to Africa for new supply as its battery market grows

China has begun to increase its imports of flake graphite, receiving an estimated 60.3kt in 2018 compared to just 5.5kt in 2017. Increases have come mainly from Africa, where the Chinese government is encouraging trade by means of zero tariffs on imported goods. China began to import large amounts of graphite for the first time in early 2018, accepting material from Syrah Resources’ Balama operation in Mozambique, which came on-line in late 2017. Mozambique accounted for around 93% of all Chinese imports in 2018

Africa provides a potential source of low-cost production as China’s own mining costs continue to rise with increasing labour, energy, and environmental costs. China has a recent history of investing in Africa in other mining sectors and is investing heavily in infrastructure projects across the continent.

Synthetic graphite electrode price escalation

High synthetic graphite prices in 2018 were the result of a perfect storm of conditions in China. Firstly, environmental plant closures in the raw material coal needle coke industry hampered the production of graphite electrodes. At the same time, consumption of graphite electrodes in electric arc furnaces (EAFs) began to rise as the Chinese government took steps to halt production of poor quality induction furnace steel. Graphite electrode prices began to increase dramatically from the middle of 2017 before falling and rising again quickly in late 2017/early 2018. Prices subsequently fell through much of 2018 but, by February 2019, were still more than 200% higher than they were in early-2017.

Prices could strengthen again going forward as demand for electrodes ramps up from the Chinese EAF industry. China began switching much of its steel production to EAF from 2017 and is expected to increase the rate of this change as more end-of-life steel becomes available. Currently, less than 10% of Chinese crude steel is produced in EAFs, but this could grow to 25% or more over the next decade. Meanwhile, the availability of needle coke continues to hamper the supply-side of the electrode industry. New needle coke production is being brought on-line but ramp-up is a slow process.  At the same time, demand for needle coke is growing in lithium-ion battery anodes, diverting some of the material otherwise used in electrodes. As of 2020, stricter marine pollution (MARPOL) regulations could also impact the supply of petroleum-based needle coke with increasing demand for low-sulphur fuels traditionally used in petroleum-based needle coke production.

Roskill’s Natural and Synthetic Graphite: Global Industry, Markets and Outlook to 2028 report will be published in June 2019 and details natural and synthetic graphite production, consumption and market trends.

Roskill is the only consulting company in the world that has up to date information and price forecasts available for petroleum needle coke, synthetic graphite, natural graphite, synthetic graphite end-uses, lithium-ion batteries, refractories, electrodes and steel under one roof. The interactions between these industries are complex and our knowledge of trends in the steel and batteries demand informs our insight on the graphite supply/demand balance.

To discuss the new report or the graphite market with Roskill, contact Suzanne Shaw: suzanne@roskill.com

Roskill experts will answer your questions…

  • How will the growth of lithium-ion batteries affect the graphite industry?
  • Will there be enough graphite to meet demand and where will it come from?
  • Which new natural and synthetic graphite projects could come on-stream by 2028?
  • How will competition between natural and synthetic change over the next decade?
  • To what extent are graphite prices forecast to increase?

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