The graphite industry is on an upward trend with increasing prices and rising demand, underpinned by the rapid uptake of lithium-ion batteries, according to Roskill.
In its Natural and Synthetic Graphite: Global Industry, Markets and Outlook to 2027 report, Roskill forecasts consumption of graphite in battery applications to grow by 17-22 per cent per year between 2017 and 2027, depending on the penetration of electric vehicles and energy storage technologies – the main markets for lithium-ion batteries.
The graphite industry is only just now recovering from several years of falling demand and low prices, according to Roskill.
“Both the largest markets for natural graphite (refractories) and synthetic graphite (electrodes) rely on the steelmaking industry, which has weakened with China’s slowing rate of industrialisation. China’s crude steel output could continue to grow at just 1 per cent per year over the next decade,” Roskill stated.
Thanks to rising battery demand and supply cutbacks caused by plant closures in the Chinese flake graphite industry, prices of natural flake graphite strengthened in late 2017 and again in 2018.
By second quarter 2018, the price of 94–97 per cent C flake was 35–45 per cent higher than in the middle of the previous year at $US865–1150/t, according to Industrial Minerals.
Synthetic graphite prices increased sharply in 2017 as coal-based needle coke closures coincided with increasing demand for graphite electrodes – coal-based needle coke accounts for just under half of the needle coke used to produce synthetic graphite.
Meanwhile, needle coke is being increasingly diverted into the battery market, which has also had an effect on its price. Synthetic graphite electrode prices rose nine-fold through the first three quarters of 2017, increasing from $US1748/t in January 2017 to a high of $US16,309/t in September.
Despite some fall back during the winter months, prices remained above $US15,600/t through February and March 2018.
The electric arc furnace (EAF) steel industry is the main user of graphite electrodes and global EAF output has strengthened since 2015 with the increasing availability of scrap steel in China and other Asian countries.
China produces just 6 per cent of its steel by EAF, compared to a global average of 25 per cent, but EAF production is likely to see a robust rise as China pushes to lower industrial pollution and improve recycling rates.
The adoption of EAF capacity will be boosted by the 2017 closure of all Chinese induction furnaces that produced poor quality steel based on steel scrap, resulting in larger amounts of steel scrap becoming available for use in EAFs, and by China’s increasing environmental taxes for traditional steelmaking methods. This will boost demand for graphite electrodes in the Chinese market.