China Zero-Covid Impact on Graphite Category

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By: Beroe Inc --

24 April, 2022

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China Zero-Covid Impact on Graphite Category
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Globally, China accounts for about 70 percent of natural graphite and 49 percent of graphite electrode production. Any production restrictions or lockdown-like scenarios in China would lead to a global shortage of the commodity.

April 22

 

Natural Graphite

825 (USD/MT)

 

Lead Time        ↑

Pricing 6-9%    ↑

 

April 22

 

Graphite Electrode

3071 (USD/MT)

 

Lead Time        ↑

Pricing 8-10%      ↑

 

Commodity Exposure

Beroe Analysis

Supplier

Natural Graphite

High

In 2021, China produced an estimated 820,000 metric tons of natural graphite. The largest consumer of both types of natural graphite is the refractory industry. Currently, the steel industry is the largest consumer of refractory materials. As a result any disruptions to the natural graphite supply chain would severely impact the production as well as the prices of steel products.

China Carbon Graphite Group

Kaiheng Graphite Carbon

Graphite Electrode

High

China’s government is driving the shift of steel manufacturing through EAF that that increased the demand for graphite electrodes. The past couple of months witnessed an uptrend in the prices due to supply tightness in the market, Moreover the rise in raw material prices aided the price hike.

Nantong Yangzi Carbon Co.,Ltd.

Anssen Metallurgy Group Co. Ltd.


Possible Market Triggers (0-6 Months)

China’s zero covid policy is expected to throw the market into uncertainty. The supply shortage of natural graphite is expected to persist in the market and it could lead to a spike in the prices. Moreover the restriction on production, logistics and transport due to lockdown scenarios is expected to aid supply woes and result in higher prices.

Beroe Recommendation

Countries like Brazil, Madagascar and Mozambique are a suitable alternate destination to China. The Balama Graphite project in Mozambique, owned by Syrah Resources, is the largest graphite mine in the world; the reserves are estimated to up to 25 million tons. Moreover the Balama project is capable of producing 350kton per annum of natural graphite concentrate. Brazil contributes to 9%-10% of the global graphite supply and the reserve estimates are about 70 million tons.




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