European Graphite Price Increase in November 2023 Amidst Export Curtailment From China

The price of Graphite increased in the European spot market in mid-November 2023 as the demand from the downstream electric vehicle and batter industries remains on a higher edge. The supply curtailment from China has been a major cause of the rush in the battery feedstock market. As the supply of natural Graphite slips southwards, the European Commission welcomes the induction of synthetic Graphite in Europe's critical raw material list. This has created the need for a European strategic partnership with Chinese manufacturers across the supply chain to develop security for these critical materials.

Last month, China announced its intention to impose export permits, temporarily enforcing dual-use item export license requirements on three synthetic Graphite-related items and six natural Graphite-related items starting from December 1. This move is part of China's strategy to regulate the supply of critical minerals in response to challenges related to its global manufacturing dominance. To counter the potential supply shortage overseas Chinese mills face, the European Carbon and Graphite Association (ECGA) has initiated a strategic partnership in Europe. This partnership aims to develop a sustainable and competitive supply chain for the domestic provision of carbon and Graphite. Given that a significant portion of Graphite supply relies on imports from overseas Chinese mills, the European Union is actively working to establish agreements to address the current critical market situation. The European strategic partnership aims to tackle various issues, including investment, permitting, technology, and recycling, to ensure that at least 40% of the natural and synthetic Graphite supplied to EU industries comes from EU sources. With the support of EU policymakers, this partnership will explore the implementation of environmental, social, and governance standards for imports. Addressing this challenge will ultimately require mobilizing investments in Europe and improving the investment framework.

The growth of Graphite consumption from the electric vehicle sector in Europe has been significantly boosted by increased demand from downstream automotive industries, particularly with the recycling of aluminum and steel scrap units. Major market players suggest that if leasing companies accelerate the electrification of their fleets, an additional 18 million households in the European Union could gain access to more affordable EVs, resulting in savings on car expenses. The demand for electric cars is experiencing a substantial surge, with a projected 35% increase in sales this year. Consumers are eagerly anticipating the introduction of more cost-effective and advanced models of electric vehicles. These factors contribute to the high demand for Graphite in the European spot market.

According to ChemAnalyst, the price of Graphite would remain on a rising trend in the European spot market as the inventory levels in the European warehouses will stay on a lower edge. Meanwhile, the rising technological advancement from the electric vehicle sector and battery industries created a more dependent market area for Graphite usage. Additionally, the government policies and deals signed by the European Union might be able to shorten the demand-supply gap.