Since we are focusing on U.S tariffs, we must focus on imports or internal production of graphite and more specifically production of natural graphite containing batteries within the U.S.
These are my thoughts only and absolutely open to debate/discussion and in no way intended to taken as fact, it is based on my thoughts, understanding and research.
E.Vs are the main use for high value/purity graphite (PSG >99.5%). All current Li batteries use graphite (mostly synthetic). There is an anticipation that natural graphite will begin to replace synthetic starting 2024/2025 and being supported by various import duties with the U.S (this is what the west thinks).
My primary point of sharing this post is to ask you the reader to understand anticipated non-chinese vs chinese production of Li battery related products (E.Vs, power tools, phones, watches, you name it) and how that will compare to chinese production of those products globally using natural graphite.
Remember in my previous post, I asked if the U.S and west were serious or (cap)able to compete with cheap chinese products on a global scale. In other words, when you look out at traffice in 10/20/30 years time, will the majority of cars be produced U.S friendly/included in IRA etc nations? Same question for your power tools, mobile devices inc phones, computers etc.
Lastly, The chinese anticipate increased production of synthetic by U.S companies primarily because of the advantages that synthetic have regardless of ESG or cost credentials.
Remembering that I came from a natural graphite bulls perspective, this is how I now see this commodity. I suspect the primary use for natural graphite will be non Li battery products.
This is a china based article so foreign means non chinese
"Chinese companies, which have been building overseas plants, said the restrictions will have little effect on their operations abroad. The Chinese firms use synthetic graphite, but not the high grade form covered under the new measures, with a density of 1.73 grams per cubic centimetre and above.China produces large quantities of synthetic graphite, which enables lower battery charge times."
"adoption among foreign manufacturers is growing, their shift from natural to synthetic graphite has been slower, in part because it is more polluting to produce petroleum-based synthetic graphite and natural graphite anodes also tend to be cheaper, which makes them vulnerable to the Chinese curbs"
"Volkswagen-backed Chinese firm Gotion High Tech, which produces batteries in Germany and plans a U.S. plant, said graphite used in its batteries has a density lower than 1.7 grams per cubic centimetre, which would make it unaffected by the restrictions"
"BTR New Material Technology, the world's largest anode producer, told Shanghai government-run media outlet The Paper that the rule's impact on it would be limited, as its products have a density of between 1.5 and 1.7 gram per cubic centimetre for EV batteries"
"Syrah Resources, which mines graphite in Mozambique and is building a plant to produce anodes in the U.S. state of Louisiana, said on Thursday it expects buyers outside of China to step up purchases of natural graphite ahead of the stricter controls taking effect"
"We believe that limiting the amount of graphite exported from China - and likely the price increase for graphite that it will create - exacerbates the challenges (and) exemplifies the need to develop synthetic graphite for the U.S. locally," EAM CEO Sunit Kapur told Reuters.
When reading this section, consider that the stats are global and not specific to non Chinese use/production
snippets:
"According to Andy Miller, COO of Benchmark Mineral Intelligence, “both the mined and synthetic graphite market is at a turning point.”
The global graphite market was estimated to be $16.4 billion in 2021, growing slightly to $17.5 billion in 2022. The growth through 2027 is projected to be at a CAGR of 7.3%, with the market reaching $25.0 billion by the end of the forecast period."
"The global shortfall initially predicted for 2024 and 2025 has now increased with an estimated deficiency of 20,000 tonnes of lithium-ion battery grade graphite in 2022."
"Benchmark sees demand for graphite over the next decade rising at an annual compound rate of 10.5%, however supply will lag at only 5.7%."
"Demand for natural graphite is set to overtake synthetic by the end of the decade because of worries about synthetic’s environmental impact. Benchmark forecasts natural graphite anode demand to grow by more than 400% by the end of the decade versus 170% for synthetic. "
"One of the requirements to qualify for the EV tax credit is related to batteries and the minerals used to make them. According to the Inflation Reduction Act, at least 40% of the critical minerals used to make US-made EV batteries must also come from US miners or recycling plants. Automakers can also qualify for the tax credit if the minerals used in their US-made batteries come from countries with free trade deals with the United States."
RNU Price at posting:
11.5¢ Sentiment: Hold Disclosure: Held
(20min delay)