{"id":14181,"date":"2025-01-21T18:52:55","date_gmt":"2025-01-21T18:52:55","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2025\/01\/21\/graphite-market-forecast-top-trends-for-graphite-in-2025\/"},"modified":"2025-01-21T18:52:55","modified_gmt":"2025-01-21T18:52:55","slug":"graphite-market-forecast-top-trends-for-graphite-in-2025","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2025\/01\/21\/graphite-market-forecast-top-trends-for-graphite-in-2025\/","title":{"rendered":"Graphite Market Forecast: Top Trends for Graphite in 2025"},"content":{"rendered":"<\/p>\n

The broad graphite market faced continued price pressure in 2024, as supply and demand trends diverged pushing natural graphite into deficit.<\/strong><\/p>\n

As the year progressed slower than forecasted end use segment demand, production uncertainty and moderate investment in capacity growth outside of China remained the dominant market themes.<\/p>\n

A late year recovery in global electric vehicle sales and a positive long term demand outlook have positioned the graphite market for a mild recovery in 2025. However, with China dominating global supply, geopolitical tensions, export restrictions, and policy changes could quickly alter the landscape.<\/p>\n

Due to the less geographically concentrated nature of the synthetic graphite market it is less exposed to Chinese disruption.<\/p>\n

\u201cAlthough synthetic graphite producers are better off, natural graphite anode producers are almost completely reliant on China, so there\u2019s a lot of concern around this at the moment,\u201d he added.<\/p>\n

Even though Willoughby doesn\u2019t foresee China limiting exports, incoming rules on US imports are adding pressure on North America to grow its domestic supply chains.<\/p>\n

\u201cWhile we expect China to continue to allow battery-related exports, companies are looking to diversify their supply to reduce the risk,\u201d he said.<\/p>\n

Willoughby continued: \u201cOn top of this, there is a need to shift away from China for the US battery supply chain. The Inflation Reduction Act (IRA) specifies that by 2027, any batteries that contain graphite from China won\u2019t be eligible for substantial tax credits. While it\u2019s not clear which of these will remain under the new administration, we expect the requirements for non-Chinese material to continue.\u201d<\/p>\n

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Graphite market facing dual supply challenges <\/h3>\n

Natural graphite production ballooned in 2022 when global mined supply reached 1,680,000 metric tons, a 73.9 percent increase from 2020\u2019s 966,000 metric tons.<\/p>\n

Global output registered a small 4.6 percent decline in 2023 totaling 1,600,000; however, the reduction was enough to send the market into deficit.<\/p>\n

According to Tony Alderson senior analyst for Benchmark Mineral Intelligence the shortfall has been attributed to rising demand from the battery anode segment.<\/p>\n

\u201cEV demand is set to rise by nearly 400 percent over the next decade. As such, the need for both natural and synthetic graphite is rising notably in line with this,\u201d Alderson wrote in an email. \u201cWith regards to this increased demand, the natural graphite balance is already not holding up with a 2024 deficit of nearly 150,000 metric tons per annum (tpa) emerging.\u201d<\/p>\n

Conversely the synthetic graphite market is experiencing a supply glut.<\/p>\n

\u201cOn the side of synthetic graphite, it is fairing a little better when talking about the market balance as supply is stronger. The market is in a notable oversupply of 350,000 tpa, which is set to reach a deficit beyond the end of the decade,\u201d he explained. \u201cOne of the reasons for this chemistry disparity is due to the greater supply and ease of building a facility in a far less time period than with natural.\u201d<\/p>\n

Although the 2025 supply narrative is different, the future of both markets looks similar, Alderson noted.<\/p>\n

\u201cDespite this, the currently announced supply is simply not enough to meet the forecasted demand out to 2034, with both [segments] reaching deficits of over 600,000 tpa which are only set to widen out to 2040,\u201d he said.<\/p>\n

In a 2022 report from Benchmark it is noted that some 300 new mines are needed to support the energy transition, a percentage of which will need to be graphite mines.<\/p>\n

\u201cWe forecast battery sector demand for raw material graphite to rise by more than 1,400 percent between 2020 and 2050,\u201d the report read. \u201cBy the end of the forecast period, total graphite demand could be three times the 2021 supply level.\u201d<\/p>\n<\/div>\n

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Shifting battery chemistries complicate forecast <\/h3>\n

Use in the EV sector is underpinning graphite demand, however as battery chemistries continue to shift market supply and demand fundamentals could also change.<\/p>\n

The rapid evolution of battery chemistries has posed significant challenges. While the shift in cathode materials from nickel ternary (NMC) to lithium iron phosphate (LFP) in China has garnered much attention, similar transformations are also occurring within the anode market, explained Willoughby.<\/p>\n

\u201cChina now primarily uses synthetic graphite anode materials as it\u2019s faster to build out new production and easier to get the raw materials,\u201d he said. \u201cHowever, that has led to a massive oversupply for synthetic due to the number of new companies in the market, and in the natural [graphite market] demand has really fallen away in the last year.\u201d<\/p>\n

While NMC cathodes and natural graphite anodes are still quite popular outside of China, slower demand growth in 2024 has seen many of the major anode producers cut back output, he added.<\/p>\n

Looking more long-term, Willoughby admitted the market could become opaque.<\/p>\n

\u201cIt\u2019s been a challenge to keep the ever-evolving supply and demand dynamics in check, particularly when the market has to increasingly consider regional regulations like the Inflation Reduction Act,\u2019 he said. \u201cWe see China continuing to operate at a surplus over the next decade because of its existing capacity, but the rest of the world still looks to need more capacity for both natural and synthetic anodes if it wants to meet its own demand.\u201d<\/p>\n

This position was reiterated by Benchmark Intelligence\u2019s Alderson who referenced the mounting geopolitical tensions between the East and West as a pain point in the long-term ex-China market buildout.<\/p>\n

\u201cChina dominates not only natural graphite production (76 percent) but also downstream markets, controlling 79 percent of natural graphite anode and 98 percent of synthetic graphite anode supply globally,\u2019 he said. \u201cThis highlights that the deeper into the supply chain you go, the more entrenched China\u2019s dominance becomes. They form the backbone of the anode supply chain, and it will be a challenge for the West to break.\u201d<\/p>\n

Alderson pointed to China\u2019s December 3, 2024, implementation of an immediate ban on dual-use exports intended for US military applications, along with heightened end-use reviews for exports like graphite to the US.<\/p>\n<\/div>\n

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Building a North American supply pipeline <\/h3>\n

To offset Chinese control, the US has taken notable steps to onshore supply.<\/p>\n

\u201cSince the US IRA\u2019s announcement in August 2022, over 500,000 tpa of anode capacity has been added, over a 200 percent+ increase,\u201d said Alderson.<\/p>\n

This move has been supported by government funding.<\/p>\n

In November, 2023 South Star Battery Metals (TSXV:STS,OTCQB:STSBF), received a US$3.2 grant from the Department of Defense (DoD) under the IRA to advance its flagship BamaStar graphite project in Alabama. <\/p>\n

Similarly, Graphite One\u2019s (TSXV:GPH,OTCQX:GPHOF) Alaska-focused subsidiary was the recipient of a US$37.5 million DoD grant in July of 2023, to cover costs associated with \u201caccelerated Feasibility Study\u201d on its name sake project.<\/p>\n

In September of the same year, the company penned a US$4.7 million contract with the DoD\u2019s Logistics Agency to develop a graphite and graphene-based foam fire suppressant as an alternative to incumbent PFAS fire-suppressant materials, as required by US law.<\/p>\n

\u201cPrivate companies are also ramping up onshoring efforts by inking offtake agreements with U.S. anode producers, setting a record in 2024 for such deals,\u201d said Alderson.<\/p>\n

\u201cDespite these advancements, North America faces a 200,000 tpa market deficit in 2024, expected to grow as EV demand accelerates. As such, notable investment will be required to drive growth and achieve any form of self-sufficiency,\u201d he added.<\/p>\n

As new North American supply becomes imperative, the sole continental producer Northern Graphite (TSXV:NGC,OTCQB,FRA:0NG), faced challenges in the low-price environment of 2024.<\/p>\n

\u201cWhile we are also moving forward to open a new pit at the Lac des Iles (LDI) and restart the plant at a higher throughput in January to meet rising demand, unless we can see our way through to higher prices, long-term supply agreements with battery makers and support from governments in Ontario, Quebec, Canada and\/or the United States, the Company will continue to struggle whilst these challenging market conditions prevail for ourselves and the rest of the industry,\u201d Chief Executive Officer Hugues Jacquemin said in the Q3 update.<\/p>\n

To aid in offsetting these pressures, Northern Graphite was able to negotiate a price increase with its customers in early January to mitigate inflation and higher production costs.<\/p>\n<\/div>\n

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Trends to watch in 2025 <\/h3>\n

As 2025 progresses both market experts offered insight on which trends could be the most impactful to the market.<\/p>\n

\u201cWe\u2019re expecting more bifurcation of the China and ex-China markets,\u201d said Wood Mackenzie\u2019s Willoughby.<\/p>\n

\u201cIn 2024, we saw domestic Chinese prices sink much more rapidly and to a greater extent than export prices,\u201d he said. \u201cWe expect them to remain low in 2025, but for US and European benchmarks to begin to climb again as the shift away from China as their major supplier creates tightness in that market.\u201d<\/p>\n

The sheer volume needed in the North American market is likely to provide price insulation for graphite produced outside of China.<\/p>\n

\u201cGiven the relative lack of ex-China mines, new production isn\u2019t expected to dent this outlook too much,\u201d he added.<\/p>\n

For Alderson, volatility will reign supreme in the first half of 2025.<\/p>\n

\u201cExcess inventory overhang of battery-grade -100 mesh is expected to sustain high supply levels through 2025 despite forecasted reduction in production costs within the Chinese market,\u201d he said. \u201cConsequently, prices are forecasted to decline further in H1 2025, averaging US$413 per metric ton, down 22 percent year-over-year.\u201d<\/p>\n

He sees more stability materializing in the latter half of the year.<\/p>\n

\u201cIn H2 2025, prices are set to recover moderately as inventories shrink and stock levels normalise with China\u2019s overall production experiencing a gradual recovery,\u201d he said. \u201cHowever, ongoing competition from synthetic graphite for battery end use applications, will likely cap price growth.\u201d<\/p>\n<\/div>\n

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.<\/strong><\/p>\n<\/p>\n

This post appeared first on investingnews.com<\/div>\n","protected":false},"excerpt":{"rendered":"

The broad graphite market faced continued price pressure in 2024, as supply and demand trends diverged pushing natural graphite into deficit. As the year progressed slower than forecasted end use segment demand, production uncertainty and moderate investment in capacity growth outside of China remained the dominant market themes. A late year recovery in global electric […]<\/p>\n","protected":false},"author":0,"featured_media":14182,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-14181","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/14181","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=14181"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/14181\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/14182"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=14181"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=14181"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=14181"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}