Those agreements include a multi-year supply of flake fines from Syrah’s Balama natural graphite mining site in Mozambique. Exact volumes flake fines to be delivered have not yet been released.
This agreement is in line with demand for supply diversification in the US and European markets to mitigate geopolitical risk, reduce reliance on China and achieve financial incentives from government policy programs, Syrah said in the announcement.
While China retains its dominant role in anode production, there is a growing trend among producers to seek long-term supply of ex-China natural graphite feed.
There are several active anode facilities in various stages of construction in the US, South Korea, Indonesia, India and Africa, indicating future demand for flake fines in these locations.
“The binding agreements will help diversify the supply chain of anode material outside China,” a source familiar with the company said. “And it will also reduce Syrah’s exposure to the Chinese spot market.”
China has been the major buyer of flake fines from Mozambique in the past couple of years. Shipments to China came to around 107,402 tonnes in 2022, according to China’s customs data, accounting for 65.89% of Mozambique’s total output in the year.
With the binding agreements, Syrah will balance shipments of flake fines sales between its Vidalia active anode production site in the US, as well as China and an increasing proportion of sales volume to ex-China locations from 2024, the company said.
Syrah is targeting at least 100,000 tonnes of Balama fines sales to third-party customers in ex-China battery supply chains from 2026, it said in the announcement.
“This might be good news against the backdrop of a weakening graphite flake fines market globally, indicating extra demand in the international markets in the near future,” a trader of flake graphite in China said.
Another trader outside China said that those agreements would mean that Syrah would not be too reliant on their sales into China.
The progressively falling flake fines prices globally has weighed on the financial performance of Syrah in the past couple of years with the company reporting a net loss after income tax of $27 million in 2022.
Fastmarkets’ price assessment for graphite flake 94% C, -100 mesh, fob China has dropped by 27.11% to $590-620 per tonne on August 3 from its historical high level in March 2022.
Meanwhile, Fastmarkets’ latest weekly assessment for downstream graphite spherical 99.95% C, 15 microns, fob China stood at $2,000-2,200 per tonne on August 3, down by 42.47% from the record high of $3,500-3,800 per tonne in March 2022.
“The graphite anode market is experiencing adjustment with relatively low operation rates among downstream producers. While there are signs of slight improvement in market performance, prices remain under pressure due to low profit margins along the supply chain,” a second trader in China said.
“Industry participants are expecting that things might get better in September and October when spherical graphite producers tend to stockpile for the traditional winter shut in Luobei, the major production hub of graphite,” the trader added.
Understand the dynamics of the graphite market
Keep up with the latest news, market intelligence and trends in the graphite market when you visit our dedicated graphite market page.
Get an in-depth, 10-year view into where and when graphite supply will come online with our graphite long-term forecast.
