As a existing or potential investor graphite market conditions...

As a existing or potential investor graphite market conditions are extremely important.

Here is a copy of a news release I was sent about current market conditions. With Syrah entering the Natural Graphite market in the next 5 months I assume that prices will decline and when you include Syrah's Admin costs that were not included in their costs projections Syrah will be forced to sell at a loss.

I welcome anyone's comments as to how you think Syrah will deal with this important issue.


IM Graphite 2017: High supply situation in graphite to continue
By DAVIDE GHILOTTI
Published: Friday, 24 March 2017

Overcapacity is still affecting the global graphite market as growth in supply has been exceeding growth in demand. New projects coming online could put further pressure on prices.
The oversupply that has kept graphite prices subdued over the past few years is not going to go away any time soon, especially as new capacity is being brought to market, delegates heard at the IM Graphite & Graphene conference held in Berlin last week.
Addressing delegates gathered at the event, Stephen Riddle, CEO of US graphite and carbon products supplier Asbury Carbons, spoke of "major growth in excess capacity" as projects in development approach the production stage.
"Global growth in demand [for graphite materials] is exceeded by growth in capacity, as [the latter] is expanding faster," Riddle told IM in Berlin.
This pattern is leading to a worsening of the imbalance between high supply – which has dampened market conditions until now – and insufficient demand to absorb that supply.
"The gap between supply and demand is widening as new projects come online," Riddle said.
In terms of demand flows, the traction created by the fast-developing battery market, specifically related to electric vehicles (EV), is driving the bulk of new demand. This is expected to continue to be the case in the coming years.
Refractories, the single largest end-application, meanwhile, remain affected by the slow performance of steel and metallurgical markets.
Prices across graphite grades have been declining for a number of years but appear to have flattened in recent months for both refractory and battery grades. The European market has remained unmoved for a long time, while in China prices posted a further decrease earlier this year, following the scrapping of export duty on the commodity.
Price pressure
As reported this week by IM, severe competition within China between companies, cities and provinces to improve their market share is unlikely to ease in the foreseeable future, as local governments remain keen to foster development of their graphite industry.
New explorations are being carried out, and funding is available to set up new projects throughout the supply chain, from mining to processing.
As China accounts for more than half of global graphite output, higher capacity in the country can easily affect prices on the export market as well as domestically.
"Whatever new volumes reach the market, the sellers of that product will vie for space through pricing," one delegate told IM in Berlin. "With the market already flat, this won’t do if you are hoping for prices to finally recover."
Nevertheless, there are a number of producers outside China who remain hopeful for an increase in prices later this year.
One western producer told IM: "We are seeing a significant increase in orders from our customers [in 2017 so far]. Prices are still stable, but there may be a rise in the next couple of months."
A second supplier based outside China agreed with this view, stating that the high stock situation that kept the market low in previous years has been redressed to some extent, and this should be sufficient for a pick-up in market levels.