Graphite Demand within China Refractory Market to Decline

Originally posted by Graphite ↑

Some news for investors that think the graphite market is growing. Only grow will come from batteries demand.

Chinese refractory demand expected to fall to 24m tpa by 2017 — China Refractory Association | Industrial Minerals which peg refractory demand as increasing.
Output, Chen said, is expected to fall to 26m tonnes.
China’s refractory output was at 29.3m tonnes in 2013, with 5m tonnes exported, according to The Association of China’s Refractories Industry.
In 2012, output was at 29.5m tonnes, according to 'The Refractories Industry Worldwide 2012-2017’ report, published by Material Technology Publications. This report said it expected output to grow to 33m tonnes by 2017 in China.
The top five importing countries in 2013 were South Korea, India, Japan, Vietnam and the US, according to The Association of China’s Refractories Industry (see graph).

Source: The Association of China’s Refractories Industry
Chen believes that demand and output will slide for three reasons. Firstly, Chen summarised that the refractories industry had shown signs of overdevelopment since the year 2000 and was now more likely to slow down as demand stabilised.
Secondly, he argued that the refractory industry was in a "serious overcapacity situation," with many companies either stockpiling, or producing below capacity. The situation is such that it is unlikely that any new investment will be made into new projects, Chen added.
Finally, Chen made the point that he expected refractory consumption to gradually drop as research and development into more sustainable practices begin to mean less wastage.
Current refractory consumption for the steel industry in China has dropped to 20kg of refractories per tonne of steel produced, down from 55kg/tonne in the 1980s. In a dry process cement kiln consumption can be as low as 0.5kg/tonne.

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Steel industry has historically used 'carbon' - not 'G' - ie 'cokes'. Probably easier to use the word 'carbon' until I get to my punchline...

Now for me, I am most interested in replacing ductile and gray iron with CGI in engines, but clearly the market is much bigger than that. Tied into my view is that CGI will be substituted where they currently use aluminium.

So ductile appears to need about 1% 'carbon', gray about 2% and CGI 4%. So although some are saying demand for iron/steel is reducing/increasing in single digit % points year on year, what to make of the looming triple digit % increase for carbon use in making engines? All forms of iron for all end uses? I'm a revhead so am using engines as the illustrative example, but the concepts apply to all iron use I believe.

So what I struggle to understand is the price for these 'carbons' currently in use. Coke - graphitised pet coke specifically. To me it looks as though it's about $US500 average, give or take $US150 on whether you're selling crap or something decent. Not the $US2500 they're talking about for dinner plate size flakes so doesn't sound too flash at first blush.

But the miner that has to look for big flakes for one customer by sorting and sifting thru all the little flakes? The graphite must meet some pretty stringent tech specs if you're going to command high G prices - so what do you do with the inbetween? Provided that the graphite you're pulling out of the ground can be sold to one high end use (batteries, nuclear, graphene, buckey balls, flying carpets, flexible phones - whatever), the remainder doesn't have to be just waste. Not all of it. Selling at $US500 p/t is a handsome cost recovery for what otherwise is considered waste for your high end customer who needs those dinner plate flakes. If you're a miner with costs low enough, then $US500 is not bad at all as a complete business model.

8-20% margin year on year is a good sustainable business model in my book. Year on year for 100 years.

So this issue of natural G replacing coke. This is the part we're all stuck on it appears. Clearly people divided on whether coke is replaced with G.

Well all I can do is look at the facts as I see them. What we call being 'Siberian' in this thread. Understanding the 'carbon' market so we can take a best guess on where our chosen stocks belong.

So if I try to use history as a teacher here. Well then...

To all the "batteries the future of graphite" devotees out there I say this: natural graphite used to be in the battery (eg: dry cells), they took it out to replace with synthetic 'carbons' and... now we're back to putting natural G in the battery again. We now call it spherical G when back then we called it flying dust. Same but different. Whether all the G in the battery is natural is the only thing we don't have an answer to. Me and a few others here in Siberia believe it is a mix of natural and synthetic. Either way, natural is in despite all the BS nonsense out there that states it isn't and never had been.

To the graphite moderated reactor devotees out there. Well looking at uranium, I see that natural graphite (Mexican grade i think) was used to split the atom, they then moved to synthetic 'carbons' for the reactors and... now we're back to putting natural G in the graphite matrix of those pebbles. Other parts of the reactor too. I believe the ratio in the pebbles is about 65% natural G, 25% synthetic and 10% binder (or thereabouts).

So to the iron devotees out there. Well the Brits and Spaniards were the first to use natural G in their iron, we at some point took it out and replaced it with coke and... and... well we don't know for certain do we.

But if iron follows the same trajectory as batteries and uranium? Well I don't believe there would be enough G on the planet to meet demand.

If G could be substituted in and out of batteries and uranium in the fashion it has been, then how hard could it possibly be for them to substitute it into iron...