Home Futures and Commodities Increase in graphite imports as China implements restrictions, prompting buyers to take action.

Increase in graphite imports as China implements restrictions, prompting buyers to take action.

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Increase in graphite imports as China implements restrictions, prompting buyers to take action.

Graphite Buyers to Boost Imports Ahead of China’s Export Curbs

China’s Export Curbs on Graphite

Some graphite consumers are planning to increase their imports of this essential ingredient for electric vehicle (EV) batteries from China in November. They aim to secure supply before the country’s export restrictions come into effect. However, analysts warn that sourcing the material may be challenging due to complex specifications.

Impact on Global Graphite Market

China, the world’s leading graphite producer and exporter, announced that starting from December 1, certain types of natural and man-made graphite would require permits for export. This move is expected to lead to a surge in buying and prices in November, according to Tom Burkett, an expert at Global Graphite Advisory LCC. Existing producers in Canada and Africa will benefit immediately, while new producers in Australia, Brazil, Africa, Canada, and the U.S. are likely to invest in ramping up production.

Similarities with Previous Export Restrictions

The new export curbs on graphite resemble those implemented on gallium and germanium, two metals used in chip-making, since August 1. The announcement of these restrictions boosted China’s exports in July as buyers rushed to secure supply. However, the restrictions caused a significant decline in exports in August and September. James Willoughby at Wood Mackenzie predicts a similar pattern for graphite, with an initial slowdown followed by a gradual recovery.

China’s Dominance in Graphite Production

China accounts for two-thirds of global natural graphite production and dominates the production of synthetic graphite. Furthermore, it manufactures over 90% of the final processed material used in EV battery anodes. The country’s increasing domestic demand for graphite products is one of the reasons behind the export restrictions.

Impact on Buyers and Battery Manufacturers

Top buyers of graphite from China, including Japan, the United States, South Korea, and India, may increase their purchases in the near term. Anode manufacturers in Japan and South Korea, in particular, could face delays in obtaining export licenses and, therefore, seek to secure supply in advance. However, some battery makers may find it difficult to source additional graphite due to extensive safety testing and specific requirements for each model of electric vehicle.

Controlled Exports for Chinese Interests

Analysts suggest that these export restrictions serve as a quota system, safeguarding Chinese interests by controlling the amount of graphite leaving the country. Chinese companies have been investing in developing synthetic graphite as demand from the EV sector continues to surge. The restrictions aim to keep this essential material within China to meet the rapid growth in EV battery demand.

Overall, the forthcoming export curbs on graphite from China are expected to have a significant impact on the global market. While buyers aim to secure supply before the restrictions take effect, challenges may arise due to complex specifications and safety testing requirements. The restrictions also highlight China’s efforts to prioritize its domestic needs and boost the development of synthetic graphite for the growing electric vehicle industry.