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Graphite prices fail to excite in Q4

10th January 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Optimism about a slight improvement in natural graphite sales throughout the fourth quarter of 2013 proved premature as the year ended on a lull in market activity, UK-based market research firm Industrial Minerals (IM) Data said on Thursday.

Little upturn in industrial end-markets meant even the seasonal slowdown in Chinese production failed to stimulate sales, which restricted any movement in prices for much of the quarter.

“Despite some signs of improvement in Chinese industrial activity and US economic figures, positive indications of end-market growth failed to boost upstream markets,” IM Data manager Simon Moores said in the firm’s first-quarter 2014 graphite outlook report.

“The lack of market activity emphasised the extent of the oversupply which has accumulated over the past 18 months, with many consumers having sufficient supplies secured for the remainder of the year,” he noted.

Since 2011, flake graphite prices, including shipping, from China had declined 47%.

In the amorphous graphite sector, Chinese domestic consumption continued to feed the market; however, weak steel output across much of the rest of the world left prices rooted at levels close to production cost.

IM Data said this situation was compounded by the Japanese market’s continuing shift away from the use of amorphous graphite in steel production, which has been a growing burden on Chinese producers throughout the year.

While a similarly steady price trend was evident across the majority of the flake graphite market, higher purity grades provided some reason for optimism approaching the end of the year.

"The price of flake, 97% carbon (C), -100 mesh from Henan, China, was revised up by 15% at the start of October, while certain grades of +98% C reached their highest prices for a number of months,” the analyst said.

“This contradictory trend was reflective of the more robust nature of demand from high-tech application markets, which are principal consumers of both higher purity flake grades and more niche grades. Nevertheless, the nature of demand from these markets was not substantial enough to insulate spherical graphite prices, which succumbed to the pressures of weak growth in lithium-ion battery markets, falling a further 5% in October,” Moores said.

While the market settled at two-year lows, China ramped up its programme of consolidation in the flake graphite market with China’s Ministry of Industry and Information Technology publishing a set of industry entrance standards, which raised fears of imminent export controls.

“Despite these concerns internationally, China’s Graphite Association emphasised in November that it was unlikely to pursue export restrictions, fearing these would be detrimental to the Chinese market,” Moores said.

Edited by Creamer Media Reporter

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