Opportunities to meet other industry members may be limited right now, but Roskill’s latest webinar analysing ‘COVID-19’s impact on the graphite and graphite anode industry’ gave delegates a chance to view the latest analysis and put forward questions to the Roskill Industrial Minerals Division team on possible routes to recovery.
Held on 23 July over two timezones in both Asia/Oceania and Europe/the Americas, a total of 220 delegates from more than 30 countries joined us for the event, which covered the impacts on both graphite supply and demand, with a focus on the battery market. All data was taken from Roskill’s upcoming 13th edition report on the graphite industry, which will provide market outlook and prices forecasts to 2030.
Looking through the timeline of events for 2020 so far, the webinar explored the initial threats to supply caused by COVID-19 through January/February, as the virus spread across China – the largest producer of both natural and synthetic graphite. However, mines and plants were relatively quick to re-open, with most being well away from the epicentre in Wuhan where lockdowns dragged on for longer, and ramping-up from end-February through March. China’s economy was thought to be already operating back at 90% of capacity two months after the initial restrictions were imposed on Wuhan in late January.
Just as supply came back online in Asia, however, lockdowns in Europe and North America began to have a significant negative effect on demand, with the WHO declaring a global pandemic from mid-March. With an estimated 40% of the global population confined by the end of the month, a consumer spending drop-off and manufacturing closures ensued. Steel production slowed as production plants closed and demand weakened from infrastructure and construction, affecting refractories and other traditional industries. Shrinking automotive and other transport sectors had a knock-on effect on the brake linings, foundry and lubricant markets. Despite this, EAF steel continued to see some growth in China, with the trend to increasing availability of steel scrap mostly unhindered by COVID-19.
The battery sector has remained fairly robust. Following weakness going into 2020 because of cuts to Chinese EV incentives that lowered battery demand last year, the market had started to recover during the first few months of 2020, despite COVID-19. This was highlighted by increasing exports of spherical graphite through to April. While demand for batteries in the rest of the world declined during the middle of 2020, the major growth market in China has recovered rapidly and will soon begin to fulfil some of its very high growth potential. The lithium-ion battery market is, therefore, expected to see growth for the full year 2020, followed by stronger recovery in 2021.
Roskill also shared its short-term and long-term scenarios for global and Chinese GDP recovery, including the assumptions which underpin application-level forecasting – a deep-v model vs a more prolonged recovery to 2022, with more stable GDP growth out to 2030. These assumptions underpin a 5-6% overall growth rate forecast for graphite demand 2021 to 2030, with much higher rates for batteries being the focus for the future of both natural and synthetic graphite. China is also extending its EV incentive scheme for another two years which will help boost battery demand in the short-term.
Focus now is on the ability of manufacturing chains to come back on-line. Economies around the world have seen their GDP held back by 25-35% during periods of “full lockdown” and will take time to recover considering on-going practical problems such as disruption to supply lines and shipping, long lag times as plants restart and staffing remains limited, and reduced appetite from consumers.
China has been at the forefront of recovery so far with its industrial production up 4.4% YoY in May, electricity and steel output up by a similar amount, and passenger car production up 11% YoY. Global equity markets had recovered to within 5% of end-2019 level by July.
However, concerns have now once again switched to supply, with rising COVID-19 infection rates in South America, India, Africa and, again, the USA.
Roskill continues to be an on-going source of information to subscribers throughout this dynamic period. An understanding of where we are and where we may be heading is key to planning a route to recovery from COVID-19 in the coming months and years.
Roskill’s NEW Natural & Synthetic Graphite: Outlook to 2030, 13th Edition report will be published soon and will include analysis of recent industry trends on supply, demand, trade and prices, as well as providing forecasts to 2030, profiles of the main producers, and an industry cost curve for spherical graphite. Click here to download the brochure and sample pages for the report, or to access further information.