Chinese graphite flake prices rise with tight supplies

Chinese graphite flake prices have risen sharply this week, as producers float higher offer prices because of tighter supplies and firmer demand from downstream sectors.

Domestic prices for 94pc grade graphite flake were assessed at a three-year high of 4,300-4,600 yuan/t ($675-722/t) ex-works today, up from Yn3,700-4,200/t on 23 November. Export prices surged by 17pc to $680-700/t fob China over the same period, in line with the higher domestic prices and firmer demand from overseas buyers.

Many producers reduced their output during September and October with the country's energy consumption curbs. Most producers in north China, particularly the largest production hub of Heilongjiang province that accounts for 80pc of domestic production, have trimmed production further because of low winter temperatures that have worsened working conditions. The lowest temperature in Harbin, the capital city of Heilongjiang, was -13°C today.

Consumers, mostly lithium-ion battery anode material producers, have begun scheduled restocking for winter consumption, while most producers are committed to long-term contracts and are reluctant to quote prices for spot buyers because of low inventories.

Lithium-ion batteries are widely used in the new energy vehicle (NEV), 5G phone and power battery industries. Rapid growth in these sectors has supported demand for batteries and its graphite feedstock.

Total output of power batteries rose to 159.8GWh during January-October, up by 250pc compared with the same period of last year, while installed volumes increased by 168.1pc to 107.5GWh over the same period, according to data from China Association of Automobile Manufacturers.

The country's NEV output reached 397,000 units in October, up by 133.2pc from a year earlier and by 7.2pc from September.

Beijing is targeting a 20pc share of NEVs in the country's total vehicle sales by 2025 and a 40pc share of NEVs in China's total vehicles by 2030, double the target of 20pc by 2025, according to an action plan issued by the country's state council in October. This is expected to bolster demand for graphite flake feedstock in the long term.

Domestic 5G phone shipments reached 210mn units in January-October, up by 68.8pc on the year, accounting for 74.5pc of the country's total phone shipments in the same period, data from the China Academy of Information and Communications Technology show.

China exported 97,214t of graphite flake during January-October, up by 24.8pc from a year earlier, according to customs data. October exports rose by 45.2pc from a year earlier to 10,243t.

The electric vehicle industry outside of China, mainly in Japan, the US and Germany, has continued to evolve in the past year, despite the effects of the Covid-19 pandemic, driven by governments' targets to reduce carbon emissions.

Global lithium battery demand forecast by Argus (TWh)