Global Graphite Market: A Historical Overview of China’s Role in the Supply Gap that Prevails Today

Currently, well over 70% of graphite used in the world can be traced back to China. The country is the undisputed leader in the global graphite and has been so since the early 1990s. According to a recent market study by Persistence Market Research, the size of the global market for graphite, in terms of revenue will be US$17.56 billion by 2020. The report also forecasts that the global graphite market will reach 4.48 million tons in volume terms during the same period.

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Though the growth prospects of the global graphite market are anything but exciting, that takes nothing away from the fact that China will continue to have an influential role to play even in the future.

Let’s take a look how a single country managed to change the very course of the supply streams of graphite over the last three decades, and how this will likely impact the graphite market of the future:

  • The majority (70%) of graphite produced in China falls under the amorphous or fine category. The remainder is flake graphite, most of which is flake.

  • Until the 1990s, when China did not wield a strong control over the global market for graphite, the supply of this material came from several different mines in the west. Prices were decided based on organic market forces.

  • But this situation underwent a drastic shift in the 1990s when China—where domestic demand for graphite was negligible—began exploiting its massive graphite reserves to dump the product into the west. This, the country’s government reckoned, was a smart way to earn foreign exchange.

  • As it went its graphite dumping spree in the 1990s, the oversupply of graphite at low prices effectively strangulated the graphite market in the west, which could neither cope with the volumes nor the prices that China offered. In fact, in the last 20 years or so, no new graphite mines have been reported in the west.

That encapsulates how the country gained a stronghold over the global supply of graphite; the situation continues to this day.

How the Soaring Domestic Demand for Graphite in China is Affecting Global Supplies

The crucial difference between the situation of the 1990s and the one today is that, about two decades ago, the domestic demand for graphite in China was low. But now, China’s thriving steel, automobile, and electronics industries have created an exciting new market for graphite within the country. This domestic demand has eaten into the shares of the material from China.

Yet another factor that has played a part in the dwindling graphite supply from the world’s second-largest economy is the standardization and regularization of this industry. This has resulted in many illegal mines closing down. Besides, a number of seasonal and small mines have been bought out by the larger players. This aspect will cut back the supply of graphite emerging from and could consequently result in global graphite prices going up.

It wouldn’t be wrong to say that this demand-supply gap is somewhat ill-timed because it is now, more than ever before, that the global automotive, electronics and nuclear industries are finding themselves exceedingly dependent on graphite and graphene.

The United States and the European Union have both classified graphite as a ‘supply-critical’ material. It now remains to be seen how the shift in demand and supply dynamics will affect the global graphite market.


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