·China’s exports of spherical graphite continue to surge

27% CAGR since 2009

2015 set to be strongest year for demand on record

China’s output of spherical graphite has continued to go from strength to strength in Q2 2015 on the back of strong lithium ion battery demand from Asia.

The country, which produces 95% of the world’s uncoated spherical graphite – the semi processed material that makes a battery’s anode – has continued to see output surge since 2013.

Data from Benchmark Mineral Intelligence shows that the first five months of 2015 are tracking ahead of the same period last year. If demand holds for the remainder of the year, exports of spherical graphite from China will comfortably exceed 30,000 tpa.

If China’s domestic consumption of battery grade graphite is taken into account, the industry could be heading towards a production level of 40,000 tpa which translates to 90-100,000 tpa of medium flake graphite concentrate (-100 mesh, 94-95% C).

China – a strong barometer for the fortunes of the industry – began significantly exporting spherical graphite in 2009 with a total 7,000 tonnes of material destined for Japan and South Korea. Each year since, exports have surged with a 27% CAGR from 2009 to 2014 – only declining once, by 9% in 2012.

While many graphite producers have been operating in either falling or stable markets, batteries have bucked the trend.

A lack of industrial demand from steel has softened the flake graphite price in recent years and resulted in increased stocks, especially for medium flake graphite in China.

This decline in the feedstock market has seen uncoated spherical graphite prices fall by 15% since mid-2013, despite strengthening demand.

Coated spherical graphite, a bottleneck in the industry controlled by Japanese and South Korean trading houses, was still selling for the equivalent of $7,000-$10,000/tonne in the same time period.

Capacity of uncoated spherical graphite elsewhere in the world has been limited with many western graphite processers finding it difficult to compete with China’s low production cost in a market that is still maturing. However, companies like Grafit Kropfmuhl (AMG Mining AG) based in Germany are increasing activity in this space.

Coated spherical graphite capacity outside of the control of Japan, South Korea and China is, however, non-existent in today’s market.