Graphite Market Overview
Graphite, a non-metallic mineral, exhibits properties akin to metals, showcasing commendable thermal and electrical conductivity. It is found in nature or can be synthesized artificially. Purified natural graphite, distinguished by its elevated crystalline structure, surpasses synthetic counterparts in both electrical and thermal conductivity. Natural and synthetic graphite find diverse applications, serving as essential components in electrodes, refractories, batteries, lubricants, and within foundries. The production of anodes for lithium-ion batteries utilizes coated spherical graphite. Furthermore, high-grade graphite plays a pivotal role in fuel cells, semiconductors, LEDs, and nuclear reactors.
The global graphite market is experiencing rapid growth, primarily due to the increasing demand for this critical mineral in various industries, including electric vehicles, energy storage technologies, Electric Arc Furnace Steel, and fuel cells. However, the graphite market s supply chain is significantly dependent on China, which raises concerns over the supply chain s susceptibility to shipping disruptions.
Graphite Demand Supply Analysis
China currently possesses the largest processing capacity for both natural and synthetic graphite, accounting for 79% of natural graphite processing and over 55% of synthetic graphite production. Additionally, China is ranked second in terms of natural graphite reserves and leads in synthetic graphite production capabilities as of 2023. Despite the growing emphasis on achieving net-zero carbon emissions by 2050, many developed economies are still reliant on China to achieve their targets for critical minerals such as graphite, nickel, cobalt, and lithium, which are used in battery packs.
China’s Dominance in Natural Graphite Market (2023)
Source: Secondary & Primary research and Prismane Consulting estimates
The demand for graphite is primarily driven by the growth of the electric vehicle market, which is crucial to decarbonizing the road transport sector responsible for 16% of global emissions. Graphite is a critical mineral used in the production of lithium-ion batteries, with each vehicle requiring approximately 65-70 kg of it. At present, natural graphite accounts for 60% of the average lithium-ion battery pack, while synthetic graphite makes up the remaining 40%. However, the growing emphasis on driving range in electric vehicles is expected to increase the share of synthetic graphite in the upcoming years.
Global Graphite Demand Analysis, By Region 2022 (kt)
Source: Secondary & Primary research and Prismane Consulting estimates
Synthetic graphite is mainly used in electrodes, which accounts for over 60% of global graphite market. It is anticipated that, this application will experience a CAGR of 6.3% until 2032. Although electrodes currently represent the largest application of synthetic graphite market, the battery application is projected to grow at a double-digit rate of over 31.6% until 2032, driven by the increasing need for e-mobility.
To ensure a reliable supply of graphite, Europe and the United States have recognized the importance of securing a consistent supply of this vital mineral. They have classified graphite as a critical mineral, indicating its significance to their economies. As part of their strategy, they must establish new natural graphite processing facilities outside China, which currently dominates the graphite market. Additionally, investing in synthetic graphite production bases can further boost the supply chain, reducing the dependence on natural graphite sources.
Graphite Trade Overview
Approximately 25% of globally produced Synthetic Graphite and more than 50% of Natural Graphite were engaged in international trade, with a significant portion originating from the Asia Pacific region. This region consistently maintained a positive trade balance for synthetic graphite, boasting an average net export volume of 141 kt.
Source: Secondary & Primary research and Prismane Consulting estimates
In 2023, the international trade volume of synthetic graphite and natural graphite experienced growth, primarily attributed to the increased sales of electric vehicles (EVs) and advancements in battery storage technology. The global trade observed a 6% increase in synthetic graphite and a 46% increase in natural graphite compared to the preceding year.
Recent Developments in the Graphite Market:
SGL Carbon plans to increase graphite production capacity for the semiconductor industry in several steps over the next two years. Capacities for purification and high-precision processing of graphite components and felts will be expanded in St. Marys, USA, and Shanghai, China. A new plant for the production of carbonized and graphitized soft felt is being constructed in Meitingen, Germany.
HEG is expanding its graphite electrode capacity from 80 kt per annum to 100 kt per annum with a total capex of Rs 1,200 crore. A second phase of investment worth Rs 800 crore is also planned.
In December 2021, POSCO Chemical accomplished a notable achievement by completing the construction of its first synthetic graphite anode materials plant in South Korea, with an annual capacity of 8 kt. The company announced plans to enhance its production capacity further by constructing a second plant, slated for completion in H2, 2024, which will yield a total capacity of 18 kt. This capacity will be adequate to satisfy the demand for approximately 470,000 electric vehicles utilizing 60 kWh.
BTR has announced its plan to establish an all-inclusive production capacity for natural graphite and flake graphite anode materials. The project will be executed in three phases and will yield a total capacity of 600 kt. The initial phase will include the establishment of a production capacity of 200 kt per year for flake graphite anode materials and 50 kt per year for natural graphite anode materials.
Shanshan launched the first phase of a 100 kt anode materials and graphitization plant in Sichuan, China in August 2021, with the first phase of a 200 kt lithium battery anode materials plant in Yunnan.
Other anode producers, including Shangtai Technology, Zhongke Electric, Guangdong Kaixjin, and XFH, are also building plants expected to start production in 2023 and 2024.
Jixi Northeast Asia Mineral Resources is building a 100 kt flake graphite plant that is set to launch in 2023.
China Minmetals is building a production complex in Hegang city, China with a designed production capacity of 6,000 kt of graphite flake ore, 200 kt of refined flake powder, 50 kt of spherical graphite, 50, kt of high-purity graphite, 50 kt of flake anode materials, scheduled to start up in 2023.
The Graphite producers in United States are planning to increase production capacity by adding two new facilities dedicated to serving the demand for battery applications. Novonix has already begun operations and aims to increase its capacity to 150 kt by 2030, while Anovion is set to commence operations in 2026. These facilities will boost the supply of synthetic graphite and support sustainable energy solutions.
China holds a leading position in the production of lithium-ion batteries and the processing of minerals essential for battery production, including graphite. The CATL factory, established in 2018, is one of the world’s largest battery manufacturing plants with a capacity of over 50 GWh per year. Other Chinese companies, such as BYD, are also making significant advancements in the lithium-ion battery industry, supported by the government s NEV subsidy program. Moreover, Chinese companies like EVE Energy and Qing Tao Energy Development are working on developing solid-state batteries that have the potential to revolutionize the electric vehicle industry.
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