Graphite Market Perfectly Positioned to Reap Benefits of Scaled-Up Demand for Lithium-Ion Batteries
PMR Mar 20th, 2015
While 2014 proved to be a relatively dull phase for the global graphite market, experts forecast a turnaround in 2015, with several recent investments in lithium-ion manufacturing facilities. The demand for graphite is about to take off. Li-ion battery manufacturing creates a significant demand for graphite, as lithium-ion batteries are used in vehicles, aircraft, and motorbikes. Besides this, high purity graphite is much sought after in solar cells and smartphones these days, and a fair share for the material also comes from the semiconductor and LED manufacturing industry.
Lithium-Ion Battery Manufacturing Facilities from Tesla, LG, Hitachi and Foxconn Technologies to Stimulate Demand in Graphite Market
Recently, Persistence Market Research estimated that the globally, graphite will be a US$ 17.56 billion market by value, by the end of 2020. Competition is poised to get more intense in the graphite market globally, with companies such as Tesla expected to spur demand for graphite by over 35% by 2020. Tesla’s ‘Gigafactory’ that will be dedicated to the production of Li-ion batteries is one of the main protagonists in the imminent growth story of the global graphite market.
While there is little doubt that this company will be the single-largest influence on the demand for graphite in the near future, there are also other companies that are venturing forth into the manufacture of lithium-ion batteries.
Hitachi, Foxconn Technologies and LG Chem are two companies that are slated to launch state-of-the-art lithium-ion battery manufacturing facilities over the next four to five years. Currently, China is the top choice for the Li-ion factories, but this could well change as manufacturing becomes increasingly expensive in China and the regulatory headwinds become stronger.
Disruption in Graphite Supply from China Could Cause Graphite Prices to Climb in Coming Years
Currently, the concern that the global market for graphite faces is this: Graphite production was stopped in China in 2014 because of environmental factors, and this is expected to affect the supply of graphite globally. That’s because China contributes to well over 70% of the global graphite production. Naturally, if the demand for graphite takes off and there is a simultaneous cutback in the supply from China, an increase in graphite prices is unavoidable. The history of markets tells us that a price rise in a particular commodity is always followed by market players looking for alternatives. It now remains to be seen if this story repeats itself in the case of graphite.
By Demand, Asia Pacific Tops the Global Graphite Market
Currently, Asia Pacific ranks as the largest market for graphite, much because of rising applications pertaining to fuel cells, solar power, nuclear reactors, as well as the aerospace and automotive industries. Demand for graphite is especially high the two nations of India and China, which are in the throes of industrialization and urbanization. The demand for graphite is also supported by the thriving steel and metal industries in China and India.
North America will also bring in considerable revenues to the graphite market thanks to exponential growth in the electric vehicles sector. A research report by an independent consulting firm suggests that in North America, the sales of electric vehicles will grow at a CAGR of 30% from 2012 through 2020. At the same time, the graphite market will see a spike in demand from the electronics industry, which relies heavily on Lithium-ion batteries. In the U.S. alone, the sales of tablets were pegged at 40.6 million units in 2013.
Market experts are of the opinion that while there could be a storm brewing on the graphite prices front, the robust demand for graphite from the electrical vehicles market could be a game changer.
