forecasts indicate a more than doubling of flake graphite demand within 5 years

Byron Capital Markets is forecasting that the natural graphite market will slip into a deficit position this year, and will require an extra 500,000 tonnes per annum of supply by 2020.

As demand increases, supplies from China, which account for about 70% of world production, are expected to fall. The Chinese government has been forcing many of the small mines, to close or consolidate, because of poor pollution control and labor safety standards, and many of the Chinese mines are running out of economically extractable graphite, especially the large high quality flake graphite needed for li-ion batteries.

Quality, consistency and reliability of supply are common problems with Chinese suppliers and are forcing Asian users to look outside of China for future supplies.

It is important to understand the difference between the three types of natural graphite. Flake graphite refers to crystalline graphite with a particle size above 200 mesh. Below 200 mesh, the industry refers to the graphite as amorphous, although technically it is still crystalline. The third type of graphite is vein or lump graphite which is found primarily in Sri Lanka.

Figure 1 includes all forms of natural graphite, of which flake graphite accounts for about 45%, or about 450,000 tonnes per year.

Flake graphite is the material of choice for li-ion batteries and most of the demand increase is expected to be in the flake graphite market.

The 500,000 tpa shortfall predicted for 2020 should be compared with 2014 production of about 450,000 tpa of flake graphite.


In other words, forecasts indicate a more than doubling of flake graphite demand within 5 years.