【Market Forecast】Major Trends Affecting Graphite Prices in 2024

Graphite, a crucial raw material for electric vehicle (EV) batteries, is one of the essential elements in the anodes of EV batteries, with each EV battery containing 50 to 100 kilograms of graphite material. While both natural and artificial graphite can be used in battery anodes, artificial graphite currently dominates the market.

According to data from Benchmark Minerals Intelligence, the carbon density in artificial graphite anode production may be over four times that of natural graphite anode production, attributed to the use of energy and fossil fuels as raw materials. The Investing News Network (INN) outlines key trends in the graphite market for 2024, based on forecasts for investors.  

Predictions for Graphite Supply and Demand in 2024

Entering 2024, China is expected to continue playing a crucial role in influencing supply factors, although new graphite mines in Africa are anticipated to bring new supply to the market. Dr. Nils Backeberg, co-founder of market intelligence firm Project Blue, informed INN via email that "existing graphite producers' supply of natural and artificial graphite, coupled with the increase in production capacity of artificial graphite in China and the addition of natural graphite projects in Africa, should help maintain market balance in 2024."

James Willoughby, Senior Analyst at Wood Mackenzie, expects Chinese producers to continue increasing graphite production in the new year, with a greater focus on artificial graphite. Following supply chain bottlenecks in 2022, China invested significantly in new graphite production capacity, and the impact is expected to continue manifesting in 2024.

Backeberg believes that the price of artificial graphite will continue to exert downward pressure on spherical graphite (natural graphite anode material), further eroding the premium on spherical graphite.

On the demand side, both Willoughby and Backeberg state that their companies anticipate strong growth in demand for both natural and artificial graphite in the electric vehicle market, while the outlook for graphite's traditional applications in the steel and iron industry, such as graphite electrodes, refractory materials, and castings, is relatively subdued. It is expected that demand for artificial graphite will continue to exceed that for natural graphite in the coming year. Regarding natural graphite demand, strong growth is anticipated outside of China in 2024, especially as other market participants seek to establish graphite supply chains beyond China.

In October 2023, China announced new export restrictions on certain graphite products. These restrictions, effective from December 1, 2023, require Chinese exporters to apply for special licenses to ship materials to global markets.

Other Graphite Market Trends to Watch in 2024

Investors need to monitor how other countries and end-users in the graphite industry will respond to China's new export restrictions. Backeberg explains, "In 2023, we have already seen graphite companies securing funding from the US and EU governments for developing mining projects and battery-grade anode material plants to diversify supply chains outside of China. Similar activities are likely to continue in 2024."

In 2024, anode manufacturers in Japan and South Korea, highly dependent on graphite imports from China, will have to consider stockpiling graphite materials in the short term to meet customer demand while awaiting approval of export licenses. Therefore, end-users will diversify their supply chains as much as possible and, if reliant on Chinese materials, must stock up in advance and work to ensure graphite supply agreements. However, Backeberg notes that this will not impact the graphite supply chain significantly in the short term in 2024.

As North American and European governments actively promote decarbonization, investors can anticipate increasing collaboration among allies to establish graphite supply chains for electric vehicle batteries beyond China in 2024 and beyond.

Willoughby suggests that investors may need to pay attention to more updates on the EU Critical Raw Materials Act, project financing news from the Canadian Critical Minerals Infrastructure Fund, and further clarification on the concerning foreign entity provisions in the US Inflation Reduction Act.

Regarding advances in battery anode materials, Willoughby expects an increase in the production capacity of Chinese silicon-carbon (Si/C) composite materials in 2024. The addition of these silicon-carbon materials will enhance battery range and charging speed, attracting more audiences, especially in Western countries where range anxiety may be a significant obstacle to owning electric vehicles. He adds that although the amount of graphite used in silicon-carbon anodes is relatively small, it is still an early-stage technology and is not expected to impact the substantial growth in graphite demand in 2024. For more analysis of the graphite market in 2024, welcome to contact us.