Graphite: China-US trade war reaches graphite industry

Natural flake graphite

Graphite products are among more than 5,000 US materials on which China introduced import tariffs from 1 June 2019. Both natural flake graphite and synthetic graphite will be affected with a 10% tariff and the intermediate product spherical graphite will see a 25% tariff. Spherical graphite is a vital material for use in the anodes of lithium-ion batteries, helping to underpin burgeoning electric vehicle market. The tariffs are a retaliation after the US announced an increase to its own tariffs on Chinese graphite and many other materials from 10% to 25% on 10 May.

Roskill View

The trade tensions are expected to have a limited impact on the graphite market in the short-term with adequate supply expected to come on-line from sources outside of both China and the USA. Significant exports of flake graphite from Mozambique and Madagascar entered the market in 2018 and additional material will be available in 2019. Most new synthetic graphite capacity is being added in China but capacities have also been rising in Japan, India, Europe and Mexico.

China is the largest producer of both natural flake and synthetic graphite and is currently the USA’s main source of imports for both products. China is the only global producer of spherical graphite but almost all of this product is either used domestically or supplied to Japan and South Korea for use in the lithium-ion battery market.

The USA does not produce its own natural flake graphite and relies on imports for its consumption. It imported 3kt of natural flake graphite from China in 2018, accounting for 45% of all its flake graphite imports that year. Its other main sources are Mexico and Canada. Despite being a major exporter, China has also begun to import large quantities of flake graphite for processing since 2018, with 57kt coming from Mozambique and Madagascar that year.

The USA is the largest destination for China’s synthetic graphite exports. Japan and South Korea are its most important markets for flake graphite, however, with the USA lacking the lithium-ion battery industry seen in these countries.

The USA itself is a major producer of synthetic graphite with manufacturers including US companies Asbury Carbons, GrafTech International and Superior Graphite, along with SGL Group of Germany and Showa Denko of Japan, but it also imports considerable quantities of synthetic graphite to meet its large domestic demand. In 2018, it relied on imports of 128kt of electrodes (including data for carbon electrodes as well as those made of synthetic graphite), 13% of which came from China. It also imported 142kt of other types of synthetic graphite, of which, 46% came from China, its largest supplier.

By comparison, China imports minimal quantities of synthetic graphite including less than 2kt of electrodes in 2018 and around 41kt of other forms, of which, 24% (10kt) were sourced from the USA.

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