China EV Battery Makers Struggle With Graphite Compression

People walk past the R&D center of Contemporary Amperex Technology Ltd (CATL) in Ningde, Fujian province, China on December 16, 2016. REUTERS / Jake Spring / File Photo

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  • Some 70% of the graphite used in battery anodes comes from China
  • Upcoming Winter Olympics in Beijing to cut production – source
  • U.S. electric vehicle maker Tesla opposes tariffs on graphite from China

Dec. 15 (Reuters) – As they scour the world in search of the lithium, nickel and cobalt resources needed to keep China ahead in electric vehicle (EV) issues, Chinese battery and electric vehicle makers are are worried about the supply of another mineral closer to home – graphite.

Graphite, in its natural and synthetic forms, is used for the negative end of a lithium-ion battery, known as the anode. About 70% of all graphite comes from China, and there are few viable alternatives for batteries.

Key EV Material Prices in China

Chinese producers have their work cut out for them to meet the global demand for graphite, which has increased alongside the rapid growth of the battery market in recent years.

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Consultancy Benchmark Mineral Intelligence (BMI) forecasts a deficit of around 20,000 tonnes of graphite in 2022, compared to a surplus of a similar size last year. About 20,000 tonnes of graphite is enough to make batteries for about 250,000 electric vehicles, an industry source said.

The world’s leading manufacturer of electric vehicle batteries, Contemporary Amperex Technology Co Ltd (CATL) (300750.SZ) is “desperate” to secure supplies of key ingredients such as graphite to cope with increasing orders, has declared a person familiar with the subject.

“There isn’t enough graphite on the market for domestic players to grab hold of,” said the source, who asked not to be identified because the person was not authorized to speak to the media.

“The demand from customers such as Tesla (TSLA.O) is increasing rapidly while the supply of raw materials is extremely tight,” the source said, adding that the recent rationing of electricity on the industry had exacerbated the situation. . Read more

CATL did not respond to Reuters’ request for comment.

According to Benchmark Mineral Intelligence

“SERIOUS SHORTAGE”

The upcoming Winter Olympics in Beijing are expected to tighten the supply of dark gray carbon even tighter as authorities seek to ensure a blue sky background for the flagship event by ordering energy-intensive and highly emitting industries like graphite for reduce production, said a source with Chinese electric vehicle maker NIO Inc (NIO.N), with knowledge of the graphite market.

“Graphite is in serious shortage and all companies are sweeping up their purchases,” said the source, who also declined to be named because he is not authorized to speak to the media.

George Miller, analyst at BMI, said graphite mines in northeast China tend to shut down during the winter months due to extremely cold temperatures, leaving graphite processors with no choice but to d ‘try to fill orders from stocks.

“Consumers of graphite, whether in China or overseas, compete for a limited stock of materials,” he said.

BMI predicts that global demand for battery anodes will grow on average by about 27% per year over the next decade, driven by the lithium-ion sector.

Prices for anode-grade graphite flakes in the Chinese domestic market have risen nearly 40% year-to-date to 4,500 yuan ($ 707) per tonne, testing the record highs of 2018, according to BMI.

Reflecting the rapid growth of the electric vehicle market, the Chinese automotive sector sold 2.99 million electric and plug-in hybrid vehicles in the first 11 months of 2021, an increase of 170% compared to the same period in 2020. Find out more

As assessed by Benchmark Mineral Intelligence

Tesla, the world’s most valuable electric vehicle maker, has registered its support for reinstating US Section 301 tariff exemptions on imports of artificial and natural graphite from China as many tariff exclusions have expired . Read more

“Tesla has concluded that no company in the United States is currently capable of producing (…) graphite with the specifications and capacity required for Tesla’s production,” the company said in a recently filed public comment. to the US Trade Representative.

China New Energy Vehicle Sales Hit New Highs in November

CATL is studying the use of the natural form of graphite in battery anodes as an alternative to artificial graphite due to greater availability, the first source said, although it may not give the same level of performance.

“We have heard indications that Chinese anode producers are shifting their anode mixes to a higher percentage of natural raw materials,” Miller said.

($ 1 = 6.3630 Chinese yuan)

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Reporting by Zhang Yan and Tom Daly; Editing by Gavin Maguire and Ana Nicolaci da Costa

Our standards: Thomson Reuters Trust Principles.

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