The Outlook for Graphite Prices Remains Tight

Graphite prices dropping, but demand rises

Graphite production is largely dominated by only a few producers: China, India, Brazil, Canada, and Turkey, with China securing nearly 70% of the world’s output. With relatively few producers, supply-side pricing factors can significantly affect graphite price trends.

Price trends: 2011-2020

Graphite prices from 2011 through to 2018 registered declines for smaller grades but an improvement for larger grades. Beyond 2018, same price behavior is expected.

From 2011 through to 2018, smaller flake size graphite (i.e. very fine, small, medium) recorded a general downtrend in value as prices decreased considerably for very fine graphite (from $930 per metric ton in 2011 to $347 in 2018), small graphite (from $1,375 to $481 during the same period), and medium graphite (from $2,138 to $500). Large graphite mirrored the same trend, decreasing from $2,514 in 2011 to $684 in 2017, before recovering to $811 in 2018. Prices for smaller-sized graphite are expected to decline until 2020, but large graphite is expected to rise with estimated forecasts of $947 in 2019 and $1,165 in 2020.

Jumbo-sized graphite, the largest flake size, did not follow industry norms from 2011 to 2018 as prices stabilized around $1,550 for 5 years (2013-2017) after a steep decline in 2012. Much of the lost value of 2012 was recovered in 2018, i.e. from $3,365 in 2011 to $2,135 in 2012, with an expected uptrend in 2019 and 2020. Estimates for 2019 and 2010 are at $3,573 and $6,175, respectively.

Industry forecasts

According to Merchant Research & Consulting Ltd.’s report, Graphite: 2018 World Market Review and Forecast to 2027, tight supply and increasing demand were key factors during the 10-year period. Factors like alternative energy and mining regulation in China are seen to impact future graphite prices.

With the closures of China plants to cut emissions, graphite prices remain volatile. Smaller-sized graphite is the most affected as more processing is required to reach higher grades. And this was obvious in the 2011-2018 price trends. Larger-sized graphite, which needed less processing, did not experience the same supply shock.

The graphite industry will still be very attractive to buyers despite the tightened pricing outlook. As prices go cheaper for higher grades, buyers will keep on buying more.