Prices for natural flake graphite have fallen through H1 2019 following a period of relative stability in Q4 2018. Prices declined by relatively minor amounts through the first quarter of this year but began to fall more steadily through the second quarter. FastMarkets reported prices for 94% C grade flake, FOB China, to have declined by 6%, 3% and 4% for fine (-100 mesh), medium (+100 mesh) and large (+80 mesh) size flake respectively in Q2 2019 compared with those in Q1. Prices continued to fall further in July.
Flake graphite prices have been suppressed as an increasing amount of supply enters the market from the ramp-up of African producers. Mainly in Mozambique and Madagascar, this extra production is being exported, mostly to China. Chinese imports from Mozambique and Madagascar have increased almost every month since early 2018. Imports of natural graphite from Mozambique were virtually zero in Q4 2017 but had increased to 14.1kt by Q2 2019, while imports from Madagascar increased from 0.6kt to 4.6kt over the same period. Material from Mozambique is mainly small and medium size flake for use in the lithium-ion battery industry, while imports from Madagascar are mainly larger size flake for use in the emerging market of expandable/expanded graphite. It should be noted that China’s Mozambican imports did decline slightly in June 2019, however, the first downward movement in six months.
Syrah Resources is responsible for almost all production in Mozambique and aims to continue its ramp up of production though H2 2019, with aims to double 2019 production from the 104kt output in 2018. The producer has already reported 48kt of flake concentrate shipments in Q1 2019 and 53kt in Q2 from its Balama operation. With demand currently growing more slowly than anticipated, this extra supply is expected to push prices even lower through the remainder of 2019 and 2020. Lower demand is a result of revisions to Chinese electric vehicle incentives since the start of the year, which have begun to negatively impact demand for lithium-ion batteries and their raw materials.
Roskill’s longer term price forecasts out to 2029 are more positive, however, as significant growth in demand for flake graphite from batteries outpaces supply from the ramp-up of current producers. Price recovery will depend on the ability for new producers to open new supply in a timely fashion and on other factors, not least, the potential for further environmental closures in China.
Roskill’s NEW Natural & Synthetic Graphite: Outlook to 2028 report was published in June 2019 and provides detailed analysis on market trends including forecast growth in lithium-ion batteries and natural/synthetic competition, as well as growth for synthetic graphite in electrodes for the growing EAF steel sector in China. It looks at the on-going impact of changing environmental policy in China and the future balance between Chinese and ROW supply. Roskill is the only consultancy company to cover research of natural graphite, synthetic graphite, petroleum coke, lithium-ion batteries, and a number of complementary raw materials—all under one roof.