Syrah to cut 4Q graphite output

Australia-based graphite producer Syrah Resources will cut its graphite production to 5,000 t/month in this year's final quarter mainly because of the depreciation of Chinese yuan and high inventories in the Chinese market.

Cuts in Chinese electric vehicle (EV) subsidies have also affected short-term graphite demand growth for lithium-ion batteries in China, while international trade tensions and tariffs continue to weigh on consumer sentiment.

Despite firm demand growth, graphite supply growth has outpaced demand in the current market, consistent with recent observations in other battery raw materials, according to Syrah.

Spot natural graphite flake prices in China have fallen across all flake sizes, affecting existing contract price renegotiations and contract renewal discussions.

Syrah's production and sales volume in the third quarter this year was around 45,000t. Its average prices in the third quarter was $400/t, down by 12pc from $457/t in the second quarter.

Syrah has become the world's largest exporter of natural graphite through its Balama project in Mozambique. Australia-based Battery Minerals is also developing two projects in the country.

Syrah said automotive original equipment manufacturers continue to focus their production on EVs, with an expected battery factory capacity pipeline to 2023 of 1,234.8GWh.

China, the world's largest consumer and producer of natural graphite, transitioned to a net importer of graphite products in January this year. China in this year's first halfi mported 105,000t of graphite, of which 75pc was from Syrah, primarily consumed in the battery supply chain.

Argus yesterday assessed Chinese domestic graphite prices at 3,500-4,000 yuan/t ($492-562/t), down from Yn4,100-4,600/t at the start of this year. Export prices fell by $10/t from a week earlier to $540-620/t fob on lower offer prices. Consumers kept inventories low and bought only small volumes for immediate requirements.