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Consumers and traders outside of China – which produces the majority of all three – were concerned about potentially strangled supply, the effect of longer lead times and the impact of end-user disclosure requirements when the controls were first announced.
Under the export control, market participants are required to submit details about the final end user for their metals and await a license to export.
But sources in affected markets in China and Europe tell Fastmarkets that the price impact has since cooled and that consumers have adjusted their procurement habits to compensate for longer wait times.
And though end-user disclosure concerned some market participants, others downplayed the impact.
China’s export controls on graphite – that were announced on October 20, 2023 and came into effect on December 1, 2023 – cover nine controlled items, including six natural graphite and three synthetic graphite-related items.
But market participants in China more recently observed that slow demand globally, high inventory levels, and high freight costs have failed to offer support to graphite export prices.
“In the EU there is absolute weak demand for graphite and even Chinese licenses make no impact,” a European buyer said this week.
In July, market participants observed that buyers have largely adjusted their buying practices to compensate for a prolonged review process.
“We’ve gone from a situation where buyers had to plan with two-month [lead times], to now having to plan with three-month [lead times],” a European graphite trader said.
China exported 17,894 tonnes of flake graphite between January and May 2024, plunging by 43.34% compared with a year earlier, due to export controls and slowing demand globally, while exports of spherical graphite declined by 31.12% to 14,651 tonnes in January to May, compared with 21,268 tonnes a year earlier, according to Chinese customs data.
Falling exports further pressured the oversupplied graphite market in China, Fastmarkets has heard.
Fastmarkets’ price assessment for graphite flake 94% C, -100 mesh, fob China stood at $450-480 per tonne on July 18, down by $90-95 (16.59%) per tonne from $540-575 per tonne on December 7, 2023, the first week after the implementation of export controls.
Broadly, Fastmarkets’ assessed graphite prices remained largely subdued after the announcement, even as market participants reported delayed shipments from China.
In both the short and long term, market participants expect the export control could have proved a boon to non-Chinese graphite producers, and in the first weeks of January, market participants warned that a more complicated export process for graphite from China could result in a loss of market share for Chinese suppliers in international markets.
Already, Chinese exporters have observed that some buyers have shifted to non-Chinese suppliers.
“The uncertainty brought about by the delayed lead time, prolonged review processes, as well as the back-and-forth communication between sellers and buyers, is among the major obstacles for Chinese flake graphite exporters,” a trader of flake graphite said. https://dashboard.fastmarkets.com/a/5202723
“In addition, the export control added to the pre-existing trend of demand shift to ex-China flake graphite producers,” the trader added.
One supplier of flake graphite in Africa said they have their order book full for the year with limited volumes available for the spot market.
“But we are not in a hurry to ramp up production this year given the sluggish market conditions for the small flake market on the whole,” the supplier source said.
On the other hand, spherical graphite, a major raw material for natural graphite anode production, may have been insulated from price movements on an export basis, owing to a relative lack of non-Chinese production during the period.
Fastmarkets’ price assessment for graphite spherical 99.95% C, 15 microns, fob China was $1,800-2,100 per tonne on July 18, down by $100-200 per tonne (7.14%) from $2,000-2,200 per tonne on December 7, 2023.
European graphite prices have increased since the export control was first announced.
Fastmarkets’ price assessment for graphite flake 94% C, -100 mesh, cif Europe was $650-750 per tonne on July 18, flat week on week, but up by 14.75% from the $600-620 per tonne assessed on October 19, 2023 – the last session before the export control was announced.
But this upward price pressure in the natural flake graphite market on a CIF Europe basis, to the extent that it has emerged, has come from higher freight prices and the pressure on non-Chinese graphite supply, market participants said.
The gallium and germanium markets reacted with immediate trepidation when the controls were first announced, this time last year, with prices immediately jumping particularly due to concerns about a lack of material.
And prices for both metals continued to increase through the remainder of 2023, as market participants scrambled to find alternative supplies of the metals, with gallium’s upwards price pressure catalyzed further by traders’ building of significant stocks of metal.
Longer lead times have had an impact on this market, according to some market participants.
“The general flexibility and liquidity have decreased significantly in my opinion,” Jan Giese, senior manager of minor metals and rare earths at German technology metals, rare earths and precious metals trader Tradium, told Fastmarkets.
After the initial increase gallium prices have since stagnated in Europe.
Fastmarkets’ price assessment for gallium 99.99% Ga min, in-whs Rotterdam was $500-600 per kg on July 19, unchanged since April 10.
The price was assessed at $250-265 per kg on June 30, 2023 – the last session before the control was announced. It since more than doubled to a peak of $550-600 per kg between March 22 and April 10, when the assessed range widened down to $500-600 per kg.
Market participants now tell Fastmarkets that stockholders are reluctant to sell material at low prices, for fear of precipitating a general price decrease and race downward – which would leave some traders, who bought toward the top of the price increase potentially left taking a loss.
Expected tightness in Western gallium markets has likely been further mitigated by greater gallium consumption in China, sources told Fastmarkets.
European germanium prices also increased. But more significant recent increases were borne out of bullish price movements in China’s market, where participants who initially expected that the domestic market would fall into an oversupply, found the impact was mitigated, by a lack of raw materials and good buying interest – including from the infrared sector, sources said.
Fastmarkets’ price assessment for germanium 99.999% Ge, in-whs Rotterdam was $2,100-2,200 per kg on July 19, unchanged from the previous assessment on July 17.
The latest assessment marks an increase of 56.36% from the $1,350-1,400 per kg assessed in the final session before the export controls were announced, but most of that gain came significantly after the announcement. The assessed price in the first pricing session of 2024, on January 3, was $1,550-1,650 per kg.
From January to May 2024, China exported an average of 2,216.4 kg of germanium metal per month, a significant decrease of 54.9% compared to the average of 4,916 kg during the same period last year, according to China customs data.
Some participants have observed a price lag between the international and Chinese germanium markets.
“We are quoting no less than $2,000 per kg for germanium,” a major Chinese germanium producer source said. “However, overseas germanium prices have not risen as much as we anticipated – compared to August 2023, prices have not even doubled, but they should be much higher.”
“Overseas markets are not very receptive to high prices,” a Chinese germanium trader and exporter said. “We tried quoting $1,900 per kg, and the feedback was that it was crazy.”
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