Graphite Demand

Graphite demand from lithium ion batteries is expected to more than treble in 4 years

According to Benchmark Mineral Intelligence, the demand for graphite (carbon) used as anode material in lithium ion batteries is set to increase by over 200% in the next four years as global cell production surges on the back of maturing pure electric vehicle demand and the inception of the utility storage market.

New data from Benchmark Mineral Intelligence forecasts the anode market – which is nearly exclusively served by naturally sourced spherical graphite and synthetically produced graphite – to increase from 80,000 tpa in 2015 to at least 250,000 tpa by the end of 2020 while the market could be as large as 400,000 tpa in the most bullish of cases with no supply restrictions.

Taking the most conservative case, Benchmark estimates that over 360,000 tonnes of medium flake graphite will be needed as a feedstock source for the spherical material by 2020. This is nearly a doubling of the flake concentrate market in 2015 should the natural-to-synthetic demand proportions remain the same in 2020.

At present, China produces 100% of the world’s spherical graphite which is predominately sourced from mines in Heilongjiang province in the country’s north-east.

Demand is being underpinned by major expansions in the lithium ion battery industry that are underway worldwide as the sector matures from megawatt plants to gigawatt scale operations.

 

Benchmark is tracking at least 12 lithium ion megafactories worldwide, seven of which are located in China and two in the US. By far the largest plant under construction is Tesla Motors’ Gigafactory 1 in Nevada – a $5bn investment set to reach its 35GWh capacity by 2020.

However, nearly 70% of new lithium ion battery demand for raw materials will be coming from China as the country’s major cell manufactures, such as ATL and Lishen, expand their operations in a race to become the world’s lowest cost producer.

Investments in new lithium ion battery capacity out to 2020 are in excess of $12bn and rising according to Benchmark data.

This is set to have a significant impact on demand for graphite anode material as cell manufacturers seek to lock up long term supplies of the material.


Article source : Benchmark Mineral Intelligence

Huge opportunity for high quality natural graphite suppliers to capture market share

Benchmark Minerals (BMI) believes China, which is the world’s largest supplier at circa 800kt/annum, has hit ‘peak natural graphite production'. As such :

  • It is unlikely to meet internal spherical graphite needs, let alone global
  • Supply bottlenecks is apparent for expandable graphite
  • There is inadequate reserves of large, super and super jumbo sized flake
  • End users are substituting natural graphite for synthetic graphite (which is less ideal

 

EMERGING TREND: Naturally sourced graphite preferred feedstock

Benchmark’s analysis suggests most end users prefer natural graphite over synthetic:

  • Lower impact on the environment and price as it is much cheaper to produce
  • Higher energy density and power output (applicable for EVs)

 

Global capacity estimated @ 402GWh by 2020 (vs. 66GWh 2015)

Global graphite demand
Source: Company reports and Volt Resources estimates

 

Applying BMI assumptions for Tesla (below), if installed capacity reaches 402GWh by 2020 then, at full utilisation, the following is required:

  • An extra 430kt of spherical graphite; at 40% conversion yield, implies an additional 1.075mt of flake graphite feedstock
  • If 65% is from natural flake, then an extra c.700kt is needed in 2020 (+600% uplift)

 

Metric 2015 2020 Implied Increase
Installed Capacity  66  402  336
Spherical Graphite (t) 85,000 515,000 430,000
Flake Graphite with 40% conversion yeild (t) 212,500 1,287,500 1,075,000
Contributed by:
Synthetic @ 35% (t) 74,375 450,635 376,250
Natural @ 65% (t) 138,125 836,875 698,750
Source : Company data, Volt Resources estimates
BMI Tesla Assumption : 1t spherical graphite from 2.5t flake concentrate
BMI Usage Assumption : 65% natural to 35% synthetic graphite

 

UPSWING: Spherical graphite price trend reflects growing demand

Spherical graphite price trend Source : Benchmark Mineral Intelligence