While they travel the globe for the lithium, nickel, and cobalt resources required to put China at the forefront of the electric vehicle (EV) race, Chinese battery and EV manufacturers are concerned about a material that is much closer to home: graphite.
The negative end of a lithium-ion battery, known as the anode, is made of graphite, which comes in both natural and manufactured forms. China produces around 70% of all graphite, and there are few feasible options for batteries.
Maintaining worldwide demand for graphite, which has risen in tandem with strong expansion in the battery sector in recent years, is a challenge for Chinese producers.
Benchmark Mineral Intelligence (BMI), a consultancy, predicts a 20,000-tonne graphite deficit in 2022, compared to a similar surplus last year. An industrial source estimated that 20,000 tonnes of graphite would be sufficient to produce batteries for around 250,000 electric vehicles.
According to a source familiar with the situation, top global EV battery maker Contemporary Amperex Technology Co Ltd is “desperate” to ensure supply of essential materials such as graphite to keep up with mounting orders.
“There’s not enough graphite in the market for domestic players to grab,” the source reportedly told Reuters news agency.
“Demand from clients such as Tesla (TSLA.O) is growing rapidly while supply of raw materials has been extremely tight,” the source said, adding that the recent power rationing on industry had exacerbated the situation. read more
There was no response from CATL.
According to a source with Chinese EV maker NIO Inc who is familiar with the graphite market, the upcoming Winter Olympics in Beijing is set to make supply of the dark grey form of carbon even tighter as authorities look to ensure a blue-sky backdrop to the showpiece event by ordering energy-intensive and high emitting industries like graphite to slash output.
“Graphite is in severe shortage and all companies are snapping up purchases,” said the source, who also declined to be named as he is not authorised to speak to the media.
According to George Miller of BMI, graphite mines in Northeast China shut during the winter months due to high low temperatures, giving graphite processors with no choice but to try to fill orders from inventory.
“Graphite consumers, whether within China or outside, are fighting over a limited stock of material,” he said.
The lithium-ion sector, according to BMI, will lead global demand for battery anodes to expand at a rate of roughly 27% per year over the next decade.
According to BMI, anode-grade graphite flake prices on the Chinese domestic market are up over 40% year to date, at 4,500 yuan ($707) per tonne, hitting 2018 highs.
China’s auto sector sold 2.99 million EVs and plug-in hybrids in the first 11 months of 2021, a 170 per cent increase over the same period in 2020, demonstrating the rapid growth of the EV market. find out more
As several tariff exclusions expired, Tesla, the world’s most valued EV company, declared its support for the reinstatement of US Section 301 duty waivers on both artificial and natural graphite imports from China.
“Tesla has concluded that no company in the United States is currently capable of producing … graphite to the required specifications and capacity needed for Tesla’s production,” the company said in a public comment lodged with the U.S. Trade Representative recently.
(Adapted from Reuters.com)