Graphite Prices Trend and Forecast

North America

In Q1 2023, the US Graphite Prices experienced mixed sentiments due to varying downstream demand and limited stockpile inventories. In January, the downstream production activity remained low despite strong buyer demand, while high inflation negatively affected demand conditions. The Inflation Reduction Act was passed to increase EV sales, resulting in increased demand for graphite flakes due to strong inquiries from downstream EV batteries. In February, the prices of raw materials upstream of graphite electrodes rose, causing high-cost pressure, and some businesses had to cease operations. Many spherical graphite producers faced narrow profit margins or losses due to the current price of fine flake graphite; some were even on hiatus. In March, the domestic market displayed a bearish sentiment, and new orders for Uncoated Spheroidized Graphite (uSPG) were falling, with major anode producers consuming existing stocks. Despite industry participants remaining optimistic, slow sales growth and high inventories held by Original Equipment Manufacturers (OEMs) suggest that natural or synthetic anode prices will continue to face downside risks.

Asia Pacific

In the first quarter of 2023, the Chinese Graphite Prices experienced a decline in demand due to sluggish market trends and high inventory levels. The Chinese government ended its subsidy system for EV purchases in January 2023, leading to a short-term reduction in demand for natural anode material. Prices of spherical graphite remained stable, as downstream demand was weak and graphite production capacity was sufficient. However, natural graphite anode prices slightly fell, as battery manufacturers aimed to reduce their costs. The COVID-19 pandemic and the economic environment also impacted end-user consumption, resulting in an increase in battery factories' inventories and destocking. In February, Chinese producers were able to lower their prices in US dollar terms due to the weak US dollar and declining costs and prices of competing synthetic graphite materials. Despite positive industry expectations, slow sales growth in Q1 and high inventories held by OEMs put natural/synthetic anode prices under downside risk. Spherical graphite prices declined due to the EV battery industry's declining demand, while flake graphite prices remained stable due to seasonal production outages.

Europe

In Q1 2023, the German Graphite market saw a decline in prices due to high inventory levels and limited downstream inquiries. Despite seasonally lower output, the demand for graphite decreased, and prices fell due to weakening demand. Graphite flake prices in Europe decreased because of slower demand from traditional sectors, especially the steel industry, and lower freight rates. The reduction in electrified car sales in Germany further weighed on demand. In February, the domestic market displayed a bearish sentiment, while demand in international markets showed a muted upward trend. Spherical graphite producers struggled to make a profit, and some even halted production due to the price of fine flake graphite. In March, high-energy synthetic graphite anode prices dropped, making them more competitive and lowering battery cell costs for automakers. However, several spherical graphite producers faced narrow profit margins or losses due to the current price of fine flake graphite.

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