Graphite Buyers Look to Increase Imports Ahead of China’s Export Curbs
According to analysts, some graphite consumers are planning to accelerate their imports of the electric vehicle (EV) battery ingredient from China in November before the country imposes export curbs on certain products. However, the complexity of specifications may pose challenges. China, as the world’s largest producer and exporter of graphite, recently announced that from December 1st, exports of certain types of natural and man-made forms of graphite would require permits. This article discusses the potential impact of China’s export curbs and analyzes the reactions of graphite buyers in the market.
Increased Demand and Potential Price Surge:
Tom Burkett from consultancy Global Graphite Advisory LCC suggests that there may be a surge in graphite buying and prices in November as companies rush to secure their supply. Given that graphite is a crucial component in EV battery anodes, the anticipation of export curbs has prompted buyers to take action.
Potential Benefits and Global Production Shifts:
The immediate impact of China’s export curbs will likely benefit existing graphite producers in Canada and Africa, while new producers in Australia, Brazil, Africa, Canada, and the U.S. are expected to ramp up production. This situation creates opportunities for increased investment and a shift in global graphite production.
Comparison to Previous Curbs on Chip-Making Metals:
China’s previous export restrictions on gallium and germanium, two chip-making metals, saw a boost in exports in July as overseas buyers hurried to secure supply. However, the restrictions implemented afterward led to a decline in exports in August and September. Notably, James Willoughby at Wood Mackenzie highlights that some companies have begun obtaining Chinese licenses for gallium and germanium, suggesting a pattern that might be followed with graphite as well.
Challenges in Sourcing and Safety Testing:
While graphite buyers may seek to increase their short-term purchasing, it may be difficult for some battery makers due to extensive safety testing requirements. Graphite used in electric vehicle models must undergo thorough safety testing, which can take up to three years. This factor might impede the ability to engage in panic-buying of graphite if needed.
China’s Focus on Domestic Demand and Growth in EV Industry:
China’s increasing demand for graphite products domestically is a key factor in the decision to curb exports. This move is seen as an effort by China to retain synthetic graphite within its borders to meet the rapid growth in demand for EV batteries. Furthermore, U.S. and European companies have been investing in synthetic graphite development, driven by the surge in EV sector demand for this carbon material.
As China prepares to implement export curbs on certain types of graphite, buyers are seeking to accelerate their imports from China before the restrictions come into effect. This anticipation has created expectations of a surge in graphite prices. However, challenges such as complex specifications, safety testing requirements, and potential difficulties in sourcing exact material needs on short notice remain. The impact of China’s export curbs on the graphite market and the subsequent shift in global production dynamics will be worth monitoring as the EV industry continues its growth trajectory.
Source: https://money.usnews.com/investing/news/articles/2023-10-20/graphite-buyers-to-boost-imports-ahead-of-chinas-curbs-analysts
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