TORONTO (miningweekly.com) – Weak end-markets had caused finer mesh grades of graphite to slip further as summer sales failed to see a seasonal upswing, London-based research house Benchmark Mineral Intelligence said in a new report on Monday.

The Benchmark Graphite Index fell a further three percentage points in June, down 2.5% on May and 4.7% on the start of the year.

Benchmark analyst and MD Simon Moores explained that flake graphite prices fell for a sixth consecutive month in June as producers continued to lower prices in response to slumping consumption rates.

The analyst said, as Chinese producers resumed operations over the summer months, inventory levels would start to rise again, particularly in China, where suppliers had spent much of the first half of the year destocking.

“This influx of material saw supply-side pressures persist, particularly for finer mesh grades which remain in excess.

“Tighter supply conditions for larger mesh products have seen the price of these grades show more resilience; however, some downward pressure remains with consumers seeking to cut costs,” Moores wrote in a note to clients.

Benchmark expected that supply-side pressures were likely to continue in the third quarter, which could see further price reductions in July.

However, with margins tightening, suppliers were becoming reluctant to sell higher-value grades at a further discounted level.

With the majority of output in Shandong province remaining offline owing to environmental restrictions, stockpiles of larger-mesh material – which Shandong was the leading supplier of – were likely to fall.

Greater output of finer mesh material from elsewhere in the country was, however, likely to add pressure to this area of the market.

Outside of China, low prices had forced the industry’s newest mine, the Woxna project, in Sweden, to suspend production, while operations in Madagascar had accelerated their output.