Benchmark Minerals Launches New Flake Graphite Price Assessments for Domestic China Grades

Benchmark Mineral Intelligence, the lithium ion battery to electric vehicle supply chain’s leading Price Reporting Agency (PRA), is pleased to announce that it has launched two new flake graphite prices for its Graphite Price Assessment service.

The two new prices are:

The new prices, which are true to the IOSCO principles at the heart of Benchmark Minerals, were launched after a market consultation to reflect the industry’s changing flows of trade and provide further insights on feedstock pricing for lithium ion battery anodes.

Andrew Miller, Product Director, Benchmark Mineral Intelligence, said: “China’s recent shift to become a net importer of flake graphite for the first time in a generation has seen increased attention on the prices required to compete with domestic suppliers.”

“Our new prices will provide another layer of insight into the global supply chain, and in particular the supply chain from raw material to battery anode graphite,” he added.

As a result of the evolution in the industry, and our understanding of the market’s nuances, Benchmark has added the following prices to its monthly Graphite Price Assessment:

The two grades we will publish are the most representative of the bulk of traded volume in the Chinese market, at a 94-95% C purity.

The +100 mesh price will be representative of what still remains the biggest driver of the flake graphite market – industrial applications such as refractories, foundries, lubricants and other niche applications.

Our -100 mesh price will represent the biggest area of growth for the market, sales into the lithium ion battery anode market.

Both prices will be assessed on a DDP basis to provide the most consistent comparison for increasing volumes that will be shipped into China, adding a new layer of insight to the assessments Benchmark Minerals already provides on international pricing out of China.

The move reflects our commitment to evolve our methodologies in response to changes in the industry.

Rather than apply a generic commodity methodology to what is a niche, speciality mineral market, we continue to work with the industry to provide the most representative and accurate prices available for what is an increasingly complex and intricate supply chain.

For more information on Benchmark Minerals Graphite Price Assessments, please contact info@benchmarkminerals.com.

Below we outline the rationale behind these new prices and explain how the intricacies of the graphite market require a nuanced approach to price assessments.

Flake foundations

For a generation, China has been the leading force in the flake graphite market; the largest producer and consumer, as well as the biggest supplier to international markets.

As recently as 2016, China accounted for over 80% of global flake graphite production, leveraging a wealth of resources to take the position of price setter in the global market.

The material which was not produced in China, was often priced against comparable offers from the rest of the world and when contract negotiations took place, the China price was always at the forefront of discussion.

Whether the market was moving up or down, China was (and still is) the leading indicator.

From the finer flake grades produced in vast quantities in the country’s north, to the larger flake distribution found in the mines of Shandong and Inner Mongolia, China dominates across the graphite spectrum.

As a result, it is pricing out of China (on an FOB basis) that has formed the foundation of Benchmark Minerals’ monthly assessments to date.

However, with the graphite market entering a period of change that will see China’s supply position challenged and a new high-tech driver of growth emerge, far removed from the industrial foundation of the industry, Benchmark Minerals has chosen to expand the prices it publishes in line with changes in the market.

A shifting landscape

The biggest development in flake graphite supply has come about through the emergence of a number of new flake graphite operations in Africa since the early 2010s, with the continent vying with China as a source of low-cost material.

Leading this charge has been Syrah Resources which produced 100,000 tonnes of flake concentrate in its first full year of production alone, the equivalent of 11% of global supply in 2018 and making the company the largest single producer in the world.

The company’s goal to displace higher-cost and less-efficient operations in China has seen major volumes imported into China for the first time in a generation, and in 2019 – supported by growing domestic consumption – the country became a net importer for the first time in a generation.

Where the price out of China was the market’s leading indicator, now the price into China is having a more substantial bearing on international markets.

The differential between China’s domestic pricing and China’s export pricing is important for two key reasons.

Firstly, with China as the leading consumer of graphite – particularly for finer mesh grades – new suppliers outside of China will increasingly have to compete with what domestic suppliers can offer.

Secondly, and most importantly, China controls the supply chain into lithium-ion batteries, and while at one time much of this supply chain was internalised, the market for battery feedstocks is becoming increasingly liquid in China.

Graphite’s nuances

In any price assessment of the flake graphite industry, it is important to understand that it is not just one market, but rather up to 10 different markets each with their own sub-segments, demand profiles, and product specifications.

No graphite deposit allows you to supply just one of these markets, so producers have to be able to sell into a cross-section of end markets.

The industrial foundations of flake graphite demand require a spectrum of flake sizes and purities but historically higher purity and larger flake has equalled higher prices.

The future growth of the market is however coming from non-industrial applications.

Value-added applications have risen from small, niche parts of the industry to major drivers of demand, using flake feedstocks to produce higher-value derivatives.

Nowhere is this more the case than in the spherical graphite market where flake concentrates are used to produce a battery anode feedstock material which is due for over 10-fold growth over the coming decade.

While this application is not new, until recently supply was controlled by a small group of suppliers that owned (or had stakes in) resources directly, so flake feedstocks were not commonly traded.

The evolution in the market over the past 1-2 years has been a rapid expansion in the number of processors in the battery anode supply chain, and the layers that support this industry.

Today, in addition to flake concentrate processors, there are companies that have established independent spherical graphite mills, purification plants, and coating furnaces – all crucial steps in taking flake graphite from a mined product to advanced anode material.

And at the centre of each of these supply chains is China, heading up an increasingly liquid and important sector at the heart of global battery ambitions.

To access Benchmark Minerals’ Graphite Price Assessments, please contact info@benchmarkminerals.com or fill in this form.

For any other questions regarding our Price Assessments contact Caspar Rawles, Head of Price Assessments, Benchmark Mineral Intelligence – crawles@benchmarkminerals.com.

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