Media Reports, page-2689

Two great articles from Fastmarkets
https://www.fastmarkets.com/insights/china-to-impose-export-controls-on-graphite-related-items
https://www.fastmarkets.com/insights/graphite-escalates-the-battery-war-andrea-hotter

A little snippet from the first: China exported a total of 57,737 tonnes of natural flake graphite (HS Code 25041010) in January-September, down by 23.16% from a year earlier, according to Chinese customs data. (That isn't much flake graphite. It's the processed natural graphite and synthetic they sell by the hundreds of thousands of tonnes)

Basically the 2nd half of the 2nd article

New projects

With no end in sight to the geopolitical tensions, there is now a reliance on new graphite projects to ease reliance on China.

While Chinese capacity expansions are focusing on synthetic graphite, the rest of the world is turning its sights on new natural graphite supply, which is lower cost and typically more environmentally friendly due to the energy intensive manufacturing process of synthetic graphite.

Fastmarkets research has forecast that with new development occurring in Africa, the combined production of natural graphite from the continent will surpass China, becoming the major supply region globally in 2033 at 50% of global supply, up from 30% currently, with China dropping to around 30% from 60% currently.

But even with growth in capacity outside China, not all new graphite will be used in anodes; it has important other uses, including in its traditional consumption source, steel. Natural graphite is used as a component in bricks that line blast furnaces, while synthetic graphite is used in electrodes for the recycling of steel.

Unfortunately,weak graphite pricesare not exactly incentivizing investment.

Within a year of peaking in the second quarter of 2022,prices for natural graphite battery precursor material slumped to an 11-year lowand remain significantly below levels required to cover operating costs for new projects.

China itself is rapidly expanding its synthetic graphite capacity, having added significant capacity over the past year and with plans for much more to come, the vast majority of which is for anode material. In fact, Chinese capacity is expected to double in the next decade, to around 70% of synthetic production by 2033 from around 57% currently.

The bottom line is that even with all the new graphite capacity expansions, China will still account from around 80% of active anode materials capacity by the end of the decade, Fastmarkets research has forecast.

Efforts to use silicon instead of graphite in anodes will likely increase, according to panelists at Fastmarkets’ European Battery Raw Materials conference in Amsterdam.

But, given the cost advantages of graphite and the huge amounts of anode material needed going forward, silicon is in no way expected to replace the current market leader. And guess what? China is already responsible for most of the world’s output of high-purity silicon for anodes.

Future

Despite all this, it is highly unlikely that China will suddenly switch off its graphite taps to the world with a complete export ban. Its own producers would suffer, and the vast sums of money already committed to graphite projects including across Europe would be wasted.

Similarly, it probably wouldn’t want to make it difficult for Chinese battery makers operating in Europe, including Contemporary Amperex Technology Co Ltd (CATL) in Germany and Hungary.

Ultimately, China accounts for almost 80% of global battery manufacturing capacity, and despite new gigafactories planned in the rest of the world, the Asia country’s dominance is set to continue.

Don’t forget that many western companies are partnered with their Chinese peers in projects through the battery supply chain, including in lithium, cobalt and nickel, and have no intentions of exiting them.

Ask the senior management at any of these western firms, including in the United States, Canada, Europe and Australia, and they speak with high regard of their counterparts in China and recognize the mutually beneficial relationships that they are in.

Erasing China’s dominance from the global active anode materials supply chain therefore seems highly unlikely, and the country has demonstrated it knows the strength of position it has. The Battery War is just getting started.