MR market, page-11

UNX have announced a sizeable MOU, with China. So far, the nearest sized potential agreements were SYR and LMB. SYR hasn't progressed to a binding off-take within the timeframe, and LMB is (in hindsight) questionable as to whether it was a true stand-alone agreement, given the merger announcement a week or so later. I guess the point I am making is that MOUs aren't worth much more than the paper they are written on, if the parties aren't genuinely trying to negotiate what is in the MOU. It seems as if Chinese entities are signing up MOUs to get a bit of a closer look at things, but aren't really signing-off at the binding commitment stage.

Second, I note this point. The world graphite market is currently 1.2m tpa, of which half is flake. That's 600,000 tpa of flake. Now I now that flake graphite demand is going to increase significantly, but the current numbers on some MOUs (100,000 tpa, 50,000 tpa) are massive numbers in the context of current production. I concede that EVs may put the demand for flake into the stratosphere, but these Chinese entities are taking a big punt if they are going to unconditionally commit on a take-or-pay agreement for these quantities. I also do note that SYR initial MOU was for a different potential use for graphite that is currently filled by another material.


My personal view is that the Chinese MOUs will end up different to the final off-takes, IF they actually get converted to binding agreements. I personally hope they do all get converted into binding agreements at massive prices, but I suspect that there will be a lot of changes, and the prices offered for those type of production targets aren't going to be as attractive as people think.