Syrah forecasts brighter outlook for graphite

Inventory drawdowns and stabilising prices should lead to a brighter outlook for the graphite market, forecasts Mozambique-focused producer Syrah Resources.

Sharply reduced output from Australia-based Syrah's Balama natural graphite operations and seasonal production closures in China have aided market conditions, the company said. Graphite is the main component in the anodes of electric vehicle and energy storage lithium-ion batteries.

Syrah produced 15,000t of flake graphite at Balama during October-December, down from 45,000t for July-September. Production was reduced in response to weaker graphite prices. Sales and shipments totalled 17,000t compared with 45,000t in the previous quarter.

Balama's 2019 output totalled 153,000t with sales and shipments of 163,000t. This was up on 104,000t produced in 2018 but was much lower than the initial 2019 target of 250,000t, partly because of production issues and also as a result of weaker demand.

The average price received for Balama's graphite was $458/t during October-December compared with $391/t for July-September. The average price for 2019 was $443/t.

Cost reductions of 20-25pc are on track to be achieved at Balama, Syrah said, with 15pc already implemented from 1 January. Output will continue to be moderated in this year's first quarter until demand requires higher output.

Syrah's Vidalia downstream processing facility in the US state of Louisiana produced its first purified spherical graphite during October-December. It is on track to produce its first battery anode material in the first half of 2020.

By Angus Macmillan