Has China reached peak graphite? – Benchmark Mineral Intelligence

13th December 2014 By: Creamer Media Reporter

TORONTO (miningweekly.com) – According to a report released this week by London-based Benchmark Mineral Intelligence, China’s share of global natural graphite output will fall by 15% this year to levels not seen since the mid-1990s, when the country began exporting to international markets.

This year alone the country’s output would fall to 70% of the world's share, from an all-time high of 85% in 2013, analyst Simon Moores reported from Shenzhen, China, on Tuesday.

This raised the significant question of whether the market had seen peak graphite from the world’s leading supplier.

“This year has been notable for the Chinese graphite industry as it consolidates and modernises its flake operations and cuts output of its amorphous graphite.

“Both forms of natural graphite contributed to significant output levels in the past of as high as 800 000 t/y. But this figure has now fallen by at least 40% as the country recalibrates its domestic steel industry, modernises its mining operations and focuses its future on higher value manufacturing,” Moores said.

As a result of these trends, which were backed by the new data, Benchmark believed that China had likely seen peak graphite output.

However, the industry could expect the receding supply to be a steady process that cut output levels to between 50% and 60% of global output over the next three to five years.

This meant that China would continue to be the world’s number-one supplier of all natural graphite products in the long term. The country would probably try and replace raw material exports with that of value-added goods including coated, battery anode materials and graphene.

Existing demand from the steel industry was expected to continue with low growth rates of 1% to 3% a year, forcing the industry to look to the battery sector for the bulk of new demand, which Benchmark expected to be anything from five to ten times the growth seen in refractories.

“And with three megafactories slated to come on-stream in the next three years, the question is will the natural graphite industry be able supply these new projects or will buyers will have to turn to its synthetic counterpart?” Moores asked.

He added that it also raised the point of where new supply would come from to satisfy existing growing markets, let alone the emergence of a potentially huge market in batteries.

“Regardless what the future holds, one thing is clear in the present: the days of low-cost, abundant graphite from China are over,” Moores said.